Correlation Between Quanta Storage and GeneFerm Biotechnology

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

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

Diversification Opportunities for Quanta Storage and GeneFerm Biotechnology

-0.57

Correlation Coefficient

Quanta Storage  GeneFerm Biotechnology

Excellent diversification

The 3 months correlation between Quanta and GeneFerm is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Quanta Storage and GeneFerm Biotechnology Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GeneFerm Biotechnology and Quanta Storage 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 Storage are associated (or correlated) with GeneFerm Biotechnology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GeneFerm Biotechnology has no effect on the direction of Quanta Storage i.e., Quanta Storage and GeneFerm Biotechnology go up and down completely randomly.

Pair Corralation between Quanta Storage and GeneFerm Biotechnology

Assuming the 90 days trading horizon Quanta Storage is expected to generate 1.41 times more return on investment than GeneFerm Biotechnology. However, Quanta Storage is 1.41 times more volatile than GeneFerm Biotechnology Co. It trades about 0.09 of its potential returns per unit of risk. GeneFerm Biotechnology Co is currently generating about -0.08 per unit of risk. If you would invest  9,760  in Quanta Storage on October 11, 2024 and sell it today you would earn a total of  1,190  from holding Quanta Storage or generate 12.19% return on investment over 90 days.

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

Quanta Storage  vs.  GeneFerm Biotechnology Co

Quanta Storage

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Quanta Storage are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Quanta Storage showed solid returns over the last few months and may actually be approaching a breakup point.

GeneFerm Biotechnology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GeneFerm Biotechnology Co 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 Quanta Storage and GeneFerm Biotechnology

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

The idea behind Quanta Storage and GeneFerm Biotechnology 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.

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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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.