Correlation Between Dai and Quant

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

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

Diversification Opportunities for Dai and Quant

0.0

Correlation Coefficient

Dai  Quant

Pay attention - limited upside

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

Pair Corralation between Dai and Quant

If you would invest  6,241  in Quant on August 30, 2024 and sell it today you would earn a total of  3,296  from holding Quant or generate 52.81% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Dai  vs.  Quant

Dai

Risk-Adjusted Performance

0 of 100

Very Weak

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

Quant

Risk-Adjusted Performance

10 of 100

OK

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

Pair Trading with Dai and Quant

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

The idea behind Dai and Quant 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.