Correlation Between Falcon Power and QST International

Can any of the company-specific risk be diversified away by investing in both Falcon Power and QST International 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 Falcon Power and QST International into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Falcon Power Co and QST International, you can compare the effects of market volatilities on Falcon Power and QST International 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 Falcon Power with a short position of QST International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Falcon Power and QST International.

Diversification Opportunities for Falcon Power and QST International

0.7

Correlation Coefficient

Falcon Power  QST International

Poor diversification

The 3 months correlation between Falcon and QST is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Falcon Power Co and QST International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on QST International and Falcon Power 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 Falcon Power Co are associated (or correlated) with QST International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of QST International has no effect on the direction of Falcon Power i.e., Falcon Power and QST International go up and down completely randomly.

Pair Corralation between Falcon Power and QST International

Assuming the 90 days trading horizon Falcon Power Co is expected to generate 2.18 times more return on investment than QST International. However, Falcon Power is 2.18 times more volatile than QST International. It trades about 0.13 of its potential returns per unit of risk. QST International is currently generating about -0.14 per unit of risk. If you would invest  1,705  in Falcon Power Co on September 15, 2024 and sell it today you would earn a total of  70.00  from holding Falcon Power Co or generate 4.11% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.65%
Values	Daily Returns

Falcon Power Co  vs.  QST International

Falcon Power

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Falcon Power Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Falcon Power is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

QST International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days QST International has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pair Trading with Falcon Power and QST International

The main advantage of trading using opposite Falcon Power and QST International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Falcon Power position performs unexpectedly, QST International 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 QST International will offset losses from the drop in QST International's long position.

The idea behind Falcon Power Co and QST International 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.

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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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.