Correlation Between QKC and THC

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

Diversification Opportunities for QKC and THC

0.17
  Correlation Coefficient
 QKC
 THC

Average diversification

The 3 months correlation between QKC and THC is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding QKC and THC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on THC and QKC 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 QKC are associated (or correlated) with THC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of THC has no effect on the direction of QKC i.e., QKC and THC go up and down completely randomly.

Pair Corralation between QKC and THC

Assuming the 90 days trading horizon QKC is expected to under-perform the THC. But the crypto coin apears to be less risky and, when comparing its historical volatility, QKC is 3.28 times less risky than THC. The crypto coin trades about -0.08 of its potential returns per unit of risk. The THC is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  0.28  in THC on January 29, 2024 and sell it today you would lose (0.10) from holding THC or give up 34.43% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

QKC  vs.  THC

 Performance 
       Timeline  
QKC 

Risk-Adjusted Performance

7 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in QKC are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, QKC exhibited solid returns over the last few months and may actually be approaching a breakup point.
THC 

Risk-Adjusted Performance

9 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in THC are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, THC exhibited solid returns over the last few months and may actually be approaching a breakup point.

QKC and THC Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with QKC and THC

The main advantage of trading using opposite QKC and THC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if QKC position performs unexpectedly, THC 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 THC will offset losses from the drop in THC's long position.
The idea behind QKC and THC 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.

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