Correlation Between Quanta Computer and KS Terminals

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

By analyzing existing cross correlation between Quanta Computer and KS Terminals, you can compare the effects of market volatilities on Quanta Computer and KS Terminals 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 KS Terminals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Quanta Computer and KS Terminals.

Diversification Opportunities for Quanta Computer and KS Terminals

-0.59

Correlation Coefficient

Quanta Computer  KS Terminals

Excellent diversification

The 3 months correlation between Quanta and 3003 is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Quanta Computer and KS Terminals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KS Terminals 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 KS Terminals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KS Terminals has no effect on the direction of Quanta Computer i.e., Quanta Computer and KS Terminals go up and down completely randomly.

Pair Corralation between Quanta Computer and KS Terminals

Assuming the 90 days trading horizon Quanta Computer is expected to under-perform the KS Terminals. But the stock apears to be less risky and, when comparing its historical volatility, Quanta Computer is 1.26 times less risky than KS Terminals. The stock trades about -0.09 of its potential returns per unit of risk. The KS Terminals is currently generating about -0.07 of returns per unit of risk over similar time horizon. If you would invest  8,000  in KS Terminals on September 25, 2024 and sell it today you would lose (260.00) from holding KS Terminals or give up 3.25% of portfolio value over 90 days.

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

Quanta Computer  vs.  KS Terminals

Quanta Computer

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Quanta Computer are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Quanta Computer may actually be approaching a critical reversion point that can send shares even higher in January 2025.

KS Terminals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days KS Terminals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Quanta Computer and KS Terminals

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

The idea behind Quanta Computer and KS Terminals 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.