Correlation Between Quant and THX

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

Diversification Opportunities for Quant and THX

0.0
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between Quant and THX is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Quant and THX in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on THX 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 THX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of THX has no effect on the direction of Quant i.e., Quant and THX go up and down completely randomly.

Pair Corralation between Quant and THX

If you would invest  11,040  in Quant on December 29, 2023 and sell it today you would earn a total of  2,532  from holding Quant or generate 22.93% return on investment over 90 days.
Time Period3 Months [change]
DirectionFlat 
StrengthInsignificant
Accuracy4.55%
ValuesDaily Returns

Quant  vs.  THX

 Performance 
       Timeline  
Quant 

Risk-Adjusted Performance

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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.
THX 

Risk-Adjusted Performance

0 of 100

 
Low
 
High
Very Weak
Over the last 90 days THX has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, THX is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Quant and THX Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Quant and THX

The main advantage of trading using opposite Quant and THX positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Quant position performs unexpectedly, THX 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 THX will offset losses from the drop in THX's long position.
The idea behind Quant and THX 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.

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