Correlation Between QKC and Ontology

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

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

Diversification Opportunities for QKC and Ontology

0.81

Correlation Coefficient

QKC  Ontology

Very poor diversification

The 3 months correlation between QKC and Ontology is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding QKC and Ontology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ontology and QKC 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 QKC are associated (or correlated) with Ontology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ontology has no effect on the direction of QKC i.e., QKC and Ontology go up and down completely randomly.

Pair Corralation between QKC and Ontology

Assuming the 90 days trading horizon QKC is expected to under-perform the Ontology. But the crypto coin apears to be less risky and, when comparing its historical volatility, QKC is 1.26 times less risky than Ontology. The crypto coin trades about -0.09 of its potential returns per unit of risk. The Ontology is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest  27.00  in Ontology on November 27, 2024 and sell it today you would lose (10.00) from holding Ontology or give up 37.04% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.44%
Values	Daily Returns

QKC  vs.  Ontology

QKC

Risk-Adjusted Performance

Very Weak

Over the last 90 days QKC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Crypto's fundamental indicators remain rather sound which may send shares a bit higher in March 2025. The latest tumult may also be a sign of longer-term up-swing for QKC shareholders.

Ontology

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ontology has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Crypto's basic indicators remain rather sound which may send shares a bit higher in March 2025. The latest tumult may also be a sign of longer-term up-swing for Ontology shareholders.

Pair Trading with QKC and Ontology

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

The idea behind QKC and Ontology 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.