Correlation Between Arqit Quantum and Bakkt Holdings

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

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

Diversification Opportunities for Arqit Quantum and Bakkt Holdings

0.16

Correlation Coefficient

Arqit Quantum  Bakkt Holdings

Average diversification

The 3 months correlation between Arqit and Bakkt is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Arqit Quantum Warrants and Bakkt Holdings Warrant in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bakkt Holdings Warrant and Arqit Quantum 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 Arqit Quantum Warrants are associated (or correlated) with Bakkt Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bakkt Holdings Warrant has no effect on the direction of Arqit Quantum i.e., Arqit Quantum and Bakkt Holdings go up and down completely randomly.

Pair Corralation between Arqit Quantum and Bakkt Holdings

Assuming the 90 days horizon Arqit Quantum Warrants is expected to generate 1.36 times more return on investment than Bakkt Holdings. However, Arqit Quantum is 1.36 times more volatile than Bakkt Holdings Warrant. It trades about 0.14 of its potential returns per unit of risk. Bakkt Holdings Warrant is currently generating about 0.14 per unit of risk. If you would invest  37.00  in Arqit Quantum Warrants on September 17, 2024 and sell it today you would earn a total of  12.00  from holding Arqit Quantum Warrants or generate 32.43% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	96.92%
Values	Daily Returns

Arqit Quantum Warrants  vs.  Bakkt Holdings Warrant

Arqit Quantum Warrants

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Arqit Quantum Warrants are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Arqit Quantum showed solid returns over the last few months and may actually be approaching a breakup point.

Bakkt Holdings Warrant

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Bakkt Holdings Warrant are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Bakkt Holdings unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Arqit Quantum and Bakkt Holdings

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

The idea behind Arqit Quantum Warrants and Bakkt Holdings Warrant 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.