Correlation Between Kenmec Mechanical and Quanta Storage
Can any of the company-specific risk be diversified away by investing in both Kenmec Mechanical and Quanta Storage 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 Kenmec Mechanical and Quanta Storage into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kenmec Mechanical Engineering and Quanta Storage, you can compare the effects of market volatilities on Kenmec Mechanical and Quanta Storage 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 Kenmec Mechanical with a short position of Quanta Storage. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kenmec Mechanical and Quanta Storage.
Diversification Opportunities for Kenmec Mechanical and Quanta Storage
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Kenmec and Quanta is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Kenmec Mechanical Engineering and Quanta Storage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Quanta Storage and Kenmec Mechanical 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 Kenmec Mechanical Engineering are associated (or correlated) with Quanta Storage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Quanta Storage has no effect on the direction of Kenmec Mechanical i.e., Kenmec Mechanical and Quanta Storage go up and down completely randomly.
Pair Corralation between Kenmec Mechanical and Quanta Storage
Assuming the 90 days trading horizon Kenmec Mechanical Engineering is expected to generate 1.16 times more return on investment than Quanta Storage. However, Kenmec Mechanical is 1.16 times more volatile than Quanta Storage. It trades about 0.09 of its potential returns per unit of risk. Quanta Storage is currently generating about 0.08 per unit of risk. If you would invest 2,499 in Kenmec Mechanical Engineering on September 26, 2024 and sell it today you would earn a total of 6,591 from holding Kenmec Mechanical Engineering or generate 263.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kenmec Mechanical Engineering vs. Quanta Storage
Performance |
| Timeline |
| Kenmec Mechanical |
| Quanta Storage |
Kenmec Mechanical and Quanta Storage Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kenmec Mechanical and Quanta Storage
The main advantage of trading using opposite Kenmec Mechanical and Quanta Storage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kenmec Mechanical position performs unexpectedly, Quanta Storage 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 Storage will offset losses from the drop in Quanta Storage's long position.| Kenmec Mechanical vs. Turvo International Co | Kenmec Mechanical vs. Sanyang Motor Co | Kenmec Mechanical vs. Global PMX Co | Kenmec Mechanical vs. Yulon Nissan Motor |
| Quanta Storage vs. Quanta Computer | Quanta Storage vs. Wiwynn Corp | Quanta Storage vs. Getac Technology Corp | Quanta Storage vs. InnoDisk |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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