Correlation Between Quant and Lisk

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

Diversification Opportunities for Quant and Lisk

0.43
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Quant and Lisk is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Quant and Lisk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lisk 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 Lisk. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lisk has no effect on the direction of Quant i.e., Quant and Lisk go up and down completely randomly.

Pair Corralation between Quant and Lisk

Assuming the 90 days trading horizon Quant is expected to generate 2.32 times less return on investment than Lisk. But when comparing it to its historical volatility, Quant is 2.7 times less risky than Lisk. It trades about 0.18 of its potential returns per unit of risk. Lisk is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  138.00  in Lisk on December 29, 2023 and sell it today you would earn a total of  58.00  from holding Lisk or generate 42.03% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Quant  vs.  Lisk

 Performance 
       Timeline  
Quant 

Risk-Adjusted Performance

0 of 100

 
Low
 
High
Very Weak
Over the last 90 days Quant has generated negative risk-adjusted returns adding no value to investors with long positions. 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.
Lisk 

Risk-Adjusted Performance

7 of 100

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

Quant and Lisk Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Quant and Lisk

The main advantage of trading using opposite Quant and Lisk positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Quant position performs unexpectedly, Lisk 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 Lisk will offset losses from the drop in Lisk's long position.
The idea behind Quant and Lisk 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.

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