Correlation Between Quanta Computer and Khgears International

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

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

Diversification Opportunities for Quanta Computer and Khgears International

-0.26

Correlation Coefficient

Quanta Computer  Khgears International

Very good diversification

The 3 months correlation between Quanta and Khgears is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Quanta Computer and Khgears International Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Khgears International 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 Khgears International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Khgears International has no effect on the direction of Quanta Computer i.e., Quanta Computer and Khgears International go up and down completely randomly.

Pair Corralation between Quanta Computer and Khgears International

Assuming the 90 days trading horizon Quanta Computer is expected to generate 1.03 times more return on investment than Khgears International. However, Quanta Computer is 1.03 times more volatile than Khgears International Limited. It trades about 0.11 of its potential returns per unit of risk. Khgears International Limited is currently generating about 0.11 per unit of risk. If you would invest  7,400  in Quanta Computer on October 1, 2024 and sell it today you would earn a total of  21,700  from holding Quanta Computer or generate 293.24% return on investment over 90 days.

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

Quanta Computer  vs.  Khgears International Limited

Quanta Computer

Risk-Adjusted Performance

6 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Quanta Computer are ranked lower than 6 (%) 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.

Khgears International

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Khgears International Limited are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Khgears International showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Quanta Computer and Khgears International

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

The idea behind Quanta Computer and Khgears International Limited 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.