Correlation Between Quintain Steel and Asustek Computer

Can any of the company-specific risk be diversified away by investing in both Quintain Steel and Asustek 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 Quintain Steel and Asustek Computer into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Quintain Steel and Asustek Computer

-0.41

Correlation Coefficient

Quintain Steel  Asustek Computer

Very good diversification

The 3 months correlation between Quintain and Asustek is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Quintain Steel Co and Asustek Computer in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Asustek Computer and Quintain Steel 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 Quintain Steel Co are associated (or correlated) with Asustek Computer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Asustek Computer has no effect on the direction of Quintain Steel i.e., Quintain Steel and Asustek Computer go up and down completely randomly.

Pair Corralation between Quintain Steel and Asustek Computer

Assuming the 90 days trading horizon Quintain Steel Co is expected to under-perform the Asustek Computer. But the stock apears to be less risky and, when comparing its historical volatility, Quintain Steel Co is 1.18 times less risky than Asustek Computer. The stock trades about -0.1 of its potential returns per unit of risk. The Asustek Computer is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  54,400  in Asustek Computer on September 16, 2024 and sell it today you would earn a total of  7,100  from holding Asustek Computer or generate 13.05% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Quintain Steel Co  vs.  Asustek Computer

Quintain Steel

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Quintain Steel Co 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.

Asustek Computer

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Asustek Computer are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Asustek Computer showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Quintain Steel and Asustek Computer

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

The idea behind Quintain Steel Co and Asustek Computer 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.