Correlation Between QST International and Wan Hai

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

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

Diversification Opportunities for QST International and Wan Hai

0.1

Correlation Coefficient

QST International  Wan Hai

Average diversification

The 3 months correlation between QST and Wan is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding QST International and Wan Hai Lines in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wan Hai Lines and QST International 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 QST International are associated (or correlated) with Wan Hai. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wan Hai Lines has no effect on the direction of QST International i.e., QST International and Wan Hai go up and down completely randomly.

Pair Corralation between QST International and Wan Hai

Assuming the 90 days trading horizon QST International is expected to generate 0.32 times more return on investment than Wan Hai. However, QST International is 3.15 times less risky than Wan Hai. It trades about -0.14 of its potential returns per unit of risk. Wan Hai Lines is currently generating about -0.18 per unit of risk. If you would invest  6,380  in QST International on September 15, 2024 and sell it today you would lose (140.00) from holding QST International or give up 2.19% of portfolio value over 90 days.

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

QST International  vs.  Wan Hai Lines

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 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.

Wan Hai Lines

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Wan Hai Lines are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Wan Hai may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with QST International and Wan Hai

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

The idea behind QST International and Wan Hai Lines 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.