Correlation Between Kuo Yang and QST International

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

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

Diversification Opportunities for Kuo Yang and QST International

-0.04

Correlation Coefficient

Kuo Yang  QST International

Good diversification

The 3 months correlation between Kuo and QST is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Kuo Yang Construction and QST International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on QST International and Kuo Yang 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 Kuo Yang Construction 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 Kuo Yang i.e., Kuo Yang and QST International go up and down completely randomly.

Pair Corralation between Kuo Yang and QST International

Assuming the 90 days trading horizon Kuo Yang Construction is expected to generate 1.62 times more return on investment than QST International. However, Kuo Yang is 1.62 times more volatile than QST International. It trades about 0.04 of its potential returns per unit of risk. QST International is currently generating about -0.31 per unit of risk. If you would invest  2,255  in Kuo Yang Construction on October 4, 2024 and sell it today you would earn a total of  20.00  from holding Kuo Yang Construction or generate 0.89% return on investment over 90 days.

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

Kuo Yang Construction  vs.  QST International

Kuo Yang Construction

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Kuo Yang Construction are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Kuo Yang is not utilizing all of its potentials. The current 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 abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in February 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Kuo Yang and QST International

The main advantage of trading using opposite Kuo Yang and QST International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kuo Yang 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 Kuo Yang Construction 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.