Correlation Between Quanta Storage and IBASE Technology

Can any of the company-specific risk be diversified away by investing in both Quanta Storage and IBASE 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 IBASE 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 IBASE Technology, you can compare the effects of market volatilities on Quanta Storage and IBASE 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 IBASE Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Quanta Storage and IBASE Technology.

Diversification Opportunities for Quanta Storage and IBASE Technology

0.36

Correlation Coefficient

Quanta Storage  IBASE Technology

Weak diversification

The 3 months correlation between Quanta and IBASE is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Quanta Storage and IBASE Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IBASE 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 IBASE Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IBASE Technology has no effect on the direction of Quanta Storage i.e., Quanta Storage and IBASE Technology go up and down completely randomly.

Pair Corralation between Quanta Storage and IBASE Technology

Assuming the 90 days trading horizon Quanta Storage is expected to generate 2.58 times more return on investment than IBASE Technology. However, Quanta Storage is 2.58 times more volatile than IBASE Technology. It trades about 0.16 of its potential returns per unit of risk. IBASE Technology is currently generating about -0.03 per unit of risk. If you would invest  9,620  in Quanta Storage on September 24, 2024 and sell it today you would earn a total of  780.00  from holding Quanta Storage or generate 8.11% return on investment over 90 days.

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

Quanta Storage  vs.  IBASE Technology

Quanta Storage

Risk-Adjusted Performance

0 of 100

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 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.

IBASE Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days IBASE Technology has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, IBASE Technology is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Quanta Storage and IBASE Technology

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

The idea behind Quanta Storage and IBASE 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.