Correlation Between Henan Provincial and Quanta Services

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Can any of the company-specific risk be diversified away by investing in both Henan Provincial and Quanta Services 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 Henan Provincial and Quanta Services into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Henan Provincial Communications and Quanta Services, you can compare the effects of market volatilities on Henan Provincial and Quanta Services 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 Henan Provincial with a short position of Quanta Services. Check out your portfolio center. Please also check ongoing floating volatility patterns of Henan Provincial and Quanta Services.

Diversification Opportunities for Henan Provincial and Quanta Services

-0.87
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between Henan and Quanta is -0.87. Overlapping area represents the amount of risk that can be diversified away by holding Henan Provincial Communication and Quanta Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Quanta Services and Henan Provincial 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 Henan Provincial Communications are associated (or correlated) with Quanta Services. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Quanta Services has no effect on the direction of Henan Provincial i.e., Henan Provincial and Quanta Services go up and down completely randomly.

Pair Corralation between Henan Provincial and Quanta Services

Assuming the 90 days trading horizon Henan Provincial Communications is expected to under-perform the Quanta Services. But the stock apears to be less risky and, when comparing its historical volatility, Henan Provincial Communications is 1.21 times less risky than Quanta Services. The stock trades about -0.12 of its potential returns per unit of risk. The Quanta Services is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  37,544  in Quanta Services on September 6, 2025 and sell it today you would earn a total of  8,520  from holding Quanta Services or generate 22.69% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthSignificant
Accuracy92.19%
ValuesDaily Returns

Henan Provincial Communication  vs.  Quanta Services

 Performance 
       Timeline  
Henan Provincial Com 

Risk-Adjusted Performance

Weakest

 
Weak
 
Strong
Over the last 90 days Henan Provincial Communications has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2026. The current disturbance may also be a sign of long term up-swing for the company investors.
Quanta Services 

Risk-Adjusted Performance

Good

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Quanta Services are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Even with relatively unfluctuating basic indicators, Quanta Services reported solid returns over the last few months and may actually be approaching a breakup point.

Henan Provincial and Quanta Services Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Henan Provincial and Quanta Services

The main advantage of trading using opposite Henan Provincial and Quanta Services positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Henan Provincial position performs unexpectedly, Quanta Services 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 Quanta Services will offset losses from the drop in Quanta Services' long position.
The idea behind Henan Provincial Communications and Quanta Services 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.
Check out your portfolio center.
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.

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