Correlation Between Quanta Storage and Arbor Technology

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

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

Diversification Opportunities for Quanta Storage and Arbor Technology

0.15

Correlation Coefficient

Quanta Storage  Arbor Technology

Average diversification

The 3 months correlation between Quanta and Arbor is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Quanta Storage and Arbor Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arbor Technology 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 Arbor Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arbor Technology has no effect on the direction of Quanta Storage i.e., Quanta Storage and Arbor Technology go up and down completely randomly.

Pair Corralation between Quanta Storage and Arbor Technology

Assuming the 90 days trading horizon Quanta Storage is expected to generate 1.22 times more return on investment than Arbor Technology. However, Quanta Storage is 1.22 times more volatile than Arbor Technology. It trades about 0.08 of its potential returns per unit of risk. Arbor Technology is currently generating about 0.05 per unit of risk. If you would invest  3,886  in Quanta Storage on September 26, 2024 and sell it today you would earn a total of  6,914  from holding Quanta Storage or generate 177.92% return on investment over 90 days.

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

Quanta Storage  vs.  Arbor Technology

Quanta Storage

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Quanta Storage are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Quanta Storage is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Arbor Technology

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Arbor Technology are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Arbor Technology showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Quanta Storage and Arbor Technology

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

The idea behind Quanta Storage and Arbor Technology 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.