Correlation Between Quectel Wireless and Montage Technology

Can any of the company-specific risk be diversified away by investing in both Quectel Wireless and Montage Technology 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 Quectel Wireless and Montage Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Quectel Wireless Solutions and Montage Technology Co, you can compare the effects of market volatilities on Quectel Wireless and Montage Technology 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 Quectel Wireless with a short position of Montage Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Quectel Wireless and Montage Technology.

Diversification Opportunities for Quectel Wireless and Montage Technology

0.61

Correlation Coefficient

Quectel Wireless  Montage Technology

Poor diversification

The 3 months correlation between Quectel and Montage is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Quectel Wireless Solutions and Montage Technology Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Montage Technology and Quectel Wireless 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 Quectel Wireless Solutions are associated (or correlated) with Montage Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Montage Technology has no effect on the direction of Quectel Wireless i.e., Quectel Wireless and Montage Technology go up and down completely randomly.

Pair Corralation between Quectel Wireless and Montage Technology

Assuming the 90 days trading horizon Quectel Wireless is expected to generate 1.04 times less return on investment than Montage Technology. In addition to that, Quectel Wireless is 1.02 times more volatile than Montage Technology Co. It trades about 0.03 of its total potential returns per unit of risk. Montage Technology Co is currently generating about 0.03 per unit of volatility. If you would invest  5,877  in Montage Technology Co on October 4, 2024 and sell it today you would earn a total of  913.00  from holding Montage Technology Co or generate 15.54% return on investment over 90 days.

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

Quectel Wireless Solutions  vs.  Montage Technology Co

Quectel Wireless Sol

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Quectel Wireless Solutions are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Quectel Wireless sustained solid returns over the last few months and may actually be approaching a breakup point.

Montage Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Montage Technology Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Quectel Wireless and Montage Technology

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

The idea behind Quectel Wireless Solutions and Montage Technology Co 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.