Correlation Between Quant and OKB

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

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

Diversification Opportunities for Quant and OKB

0.88

Correlation Coefficient

Quant  OKB

Very poor diversification

The 3 months correlation between Quant and OKB is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Quant and OKB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OKB 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 OKB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OKB has no effect on the direction of Quant i.e., Quant and OKB go up and down completely randomly.

Pair Corralation between Quant and OKB

Assuming the 90 days trading horizon Quant is expected to under-perform the OKB. In addition to that, Quant is 1.18 times more volatile than OKB. It trades about 0.0 of its total potential returns per unit of risk. OKB is currently generating about 0.07 per unit of volatility. If you would invest  5,093  in OKB on January 19, 2024 and sell it today you would earn a total of  464.00  from holding OKB or generate 9.11% return on investment over 90 days.

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

Quant  vs.  OKB

Quant

Risk-Adjusted Performance

0 of 100

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.

OKB

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in OKB are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental drivers, OKB may actually be approaching a critical reversion point that can send shares even higher in May 2024.

Pair Trading with Quant and OKB

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

The idea behind Quant and OKB 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.