Correlation Between Quant and ZCash

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

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

Diversification Opportunities for Quant and ZCash

0.86

Correlation Coefficient

Quant  ZCash

Very poor diversification

The 3 months correlation between Quant and ZCash is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Quant and ZCash in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ZCash 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 ZCash. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ZCash has no effect on the direction of Quant i.e., Quant and ZCash go up and down completely randomly.

Pair Corralation between Quant and ZCash

Assuming the 90 days trading horizon Quant is expected to generate 0.98 times more return on investment than ZCash. However, Quant is 1.02 times less risky than ZCash. It trades about 0.02 of its potential returns per unit of risk. ZCash is currently generating about -0.03 per unit of risk. If you would invest  10,631  in Quant on January 19, 2024 and sell it today you would lose (388.00) from holding Quant or give up 3.65% of portfolio value over 90 days.

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

Quant  vs.  ZCash

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.

ZCash

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Quant and ZCash

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

The idea behind Quant and ZCash 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.