Correlation Between Far EasTone and Quanta Computer
Can any of the company-specific risk be diversified away by investing in both Far EasTone and Quanta Computer 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 Far EasTone and Quanta Computer into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Far EasTone Telecommunications and Quanta Computer, you can compare the effects of market volatilities on Far EasTone and Quanta Computer 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 Far EasTone with a short position of Quanta Computer. Check out your portfolio center. Please also check ongoing floating volatility patterns of Far EasTone and Quanta Computer.
Diversification Opportunities for Far EasTone and Quanta Computer
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Far and Quanta is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Far EasTone Telecommunications and Quanta Computer in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Quanta Computer and Far EasTone 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 Far EasTone Telecommunications are associated (or correlated) with Quanta Computer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Quanta Computer has no effect on the direction of Far EasTone i.e., Far EasTone and Quanta Computer go up and down completely randomly.
Pair Corralation between Far EasTone and Quanta Computer
Assuming the 90 days trading horizon Far EasTone Telecommunications is expected to generate 0.53 times more return on investment than Quanta Computer. However, Far EasTone Telecommunications is 1.88 times less risky than Quanta Computer. It trades about 0.05 of its potential returns per unit of risk. Quanta Computer is currently generating about -0.08 per unit of risk. If you would invest 8,900 in Far EasTone Telecommunications on September 1, 2024 and sell it today you would earn a total of 90.00 from holding Far EasTone Telecommunications or generate 1.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Far EasTone Telecommunications vs. Quanta Computer
Performance |
| Timeline |
| Far EasTone Telecomm |
| Quanta Computer |
Far EasTone and Quanta Computer Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Far EasTone and Quanta Computer
The main advantage of trading using opposite Far EasTone and Quanta Computer positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Far EasTone position performs unexpectedly, Quanta Computer 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 Quanta Computer will offset losses from the drop in Quanta Computer's long position.| Far EasTone vs. Chunghwa Telecom Co | Far EasTone vs. President Chain Store | Far EasTone vs. Formosa Petrochemical Corp | Far EasTone vs. Formosa Chemicals Fibre |
| Quanta Computer vs. Compal Electronics | Quanta Computer vs. Asustek Computer | Quanta Computer vs. Delta Electronics | Quanta Computer vs. Inventec Corp |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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