Correlation Between Quant and Binance Coin

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

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

Diversification Opportunities for Quant and Binance Coin

0.63

Correlation Coefficient

Quant  Binance Coin

Poor diversification

The 3 months correlation between Quant and Binance is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Quant and Binance Coin in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Binance Coin and Quant 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 Quant are associated (or correlated) with Binance Coin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Binance Coin has no effect on the direction of Quant i.e., Quant and Binance Coin go up and down completely randomly.

Pair Corralation between Quant and Binance Coin

Assuming the 90 days trading horizon Quant is expected to under-perform the Binance Coin. In addition to that, Quant is 1.25 times more volatile than Binance Coin. It trades about -0.22 of its total potential returns per unit of risk. Binance Coin is currently generating about 0.09 per unit of volatility. If you would invest  57,401  in Binance Coin on January 26, 2024 and sell it today you would earn a total of  3,219  from holding Binance Coin or generate 5.61% return on investment over 90 days.

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

Quant  vs.  Binance Coin

Quant

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Quant are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Quant is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Binance Coin

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Binance Coin are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental drivers, Binance Coin exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Quant and Binance Coin

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

The idea behind Quant and Binance Coin 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.