Correlation Between Nasdaq and BenQ Medical

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

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

Diversification Opportunities for Nasdaq and BenQ Medical

-0.45

Correlation Coefficient

Nasdaq  BenQ Medical

Very good diversification

The 3 months correlation between Nasdaq and BenQ is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Nasdaq Inc and BenQ Medical Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BenQ Medical Technology and Nasdaq 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 Nasdaq Inc are associated (or correlated) with BenQ Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BenQ Medical Technology has no effect on the direction of Nasdaq i.e., Nasdaq and BenQ Medical go up and down completely randomly.

Pair Corralation between Nasdaq and BenQ Medical

Given the investment horizon of 90 days Nasdaq Inc is expected to generate 0.84 times more return on investment than BenQ Medical. However, Nasdaq Inc is 1.2 times less risky than BenQ Medical. It trades about 0.05 of its potential returns per unit of risk. BenQ Medical Technology is currently generating about -0.03 per unit of risk. If you would invest  5,838  in Nasdaq Inc on October 22, 2024 and sell it today you would earn a total of  2,045  from holding Nasdaq Inc or generate 35.03% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.59%
Values	Daily Returns

Nasdaq Inc  vs.  BenQ Medical Technology

Nasdaq Inc

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Nasdaq Inc are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady basic indicators, Nasdaq may actually be approaching a critical reversion point that can send shares even higher in February 2025.

BenQ Medical Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BenQ Medical Technology has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in February 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Nasdaq and BenQ Medical

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

The idea behind Nasdaq Inc and BenQ Medical 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..