Correlation Between Quanta Computer and Test Research
Can any of the company-specific risk be diversified away by investing in both Quanta Computer and Test Research at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Quanta Computer and Test Research into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Quanta Computer and Test Research, you can compare the effects of market volatilities on Quanta Computer and Test Research and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Quanta Computer with a short position of Test Research. Check out your portfolio center. Please also check ongoing floating volatility patterns of Quanta Computer and Test Research.
Diversification Opportunities for Quanta Computer and Test Research
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Quanta and Test is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Quanta Computer and Test Research in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Test Research and Quanta Computer is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Quanta Computer are associated (or correlated) with Test Research. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Test Research has no effect on the direction of Quanta Computer i.e., Quanta Computer and Test Research go up and down completely randomly.
Pair Corralation between Quanta Computer and Test Research
Assuming the 90 days trading horizon Quanta Computer is expected to generate 1.3 times more return on investment than Test Research. However, Quanta Computer is 1.3 times more volatile than Test Research. It trades about 0.11 of its potential returns per unit of risk. Test Research is currently generating about 0.08 per unit of risk. If you would invest 7,360 in Quanta Computer on August 26, 2024 and sell it today you would earn a total of 22,340 from holding Quanta Computer or generate 303.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Quanta Computer vs. Test Research
Performance |
| Timeline |
| Quanta Computer |
| Test Research |
Quanta Computer and Test Research Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Quanta Computer and Test Research
The main advantage of trading using opposite Quanta Computer and Test Research positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Quanta Computer position performs unexpectedly, Test Research can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Test Research will offset losses from the drop in Test Research's long position.The idea behind Quanta Computer and Test Research pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Test Research vs. Novatek Microelectronics Corp | Test Research vs. Quanta Computer | Test Research vs. United Microelectronics |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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