Correlation Between Fortune Information and Quanta Storage

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

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

Diversification Opportunities for Fortune Information and Quanta Storage

-0.26

Correlation Coefficient

Fortune Information  Quanta Storage

Very good diversification

The 3 months correlation between Fortune and Quanta is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Fortune Information Systems and Quanta Storage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Quanta Storage and Fortune Information 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 Fortune Information Systems 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 Fortune Information i.e., Fortune Information and Quanta Storage go up and down completely randomly.

Pair Corralation between Fortune Information and Quanta Storage

Assuming the 90 days trading horizon Fortune Information Systems is expected to generate 1.87 times more return on investment than Quanta Storage. However, Fortune Information is 1.87 times more volatile than Quanta Storage. It trades about 0.3 of its potential returns per unit of risk. Quanta Storage is currently generating about -0.05 per unit of risk. If you would invest  2,680  in Fortune Information Systems on December 30, 2024 and sell it today you would earn a total of  3,070  from holding Fortune Information Systems or generate 114.55% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.25%
Values	Daily Returns

Fortune Information Systems  vs.  Quanta Storage

Fortune Information

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Fortune Information Systems are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Fortune Information showed solid returns over the last few months and may actually be approaching a breakup point.

Quanta Storage

Risk-Adjusted Performance

Very Weak

Over the last 90 days Quanta Storage 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 Fortune Information and Quanta Storage

The main advantage of trading using opposite Fortune Information and Quanta Storage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fortune Information 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.

The idea behind Fortune Information Systems and Quanta Storage 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.

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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.