Correlation Between Qtum and Polygon

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

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

Diversification Opportunities for Qtum and Polygon

0.68

Correlation Coefficient

Qtum  Polygon

Poor diversification

The 3 months correlation between Qtum and Polygon is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Qtum and Polygon in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Polygon and Qtum 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 Qtum are associated (or correlated) with Polygon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Polygon has no effect on the direction of Qtum i.e., Qtum and Polygon go up and down completely randomly.

Pair Corralation between Qtum and Polygon

Assuming the 90 days trading horizon Qtum is expected to generate 1.39 times more return on investment than Polygon. However, Qtum is 1.39 times more volatile than Polygon. It trades about -0.05 of its potential returns per unit of risk. Polygon is currently generating about -0.32 per unit of risk. If you would invest  426.00  in Qtum on January 19, 2024 and sell it today you would lose (53.00) from holding Qtum or give up 12.44% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.65%
Values	Daily Returns

Qtum  vs.  Polygon

Qtum

Risk-Adjusted Performance

7 of 100

OK

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

Polygon

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Polygon has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Crypto's fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for Polygon shareholders.

Pair Trading with Qtum and Polygon

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

The idea behind Qtum and Polygon 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.