Correlation Between Quantum and Digital Ally

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

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

Diversification Opportunities for Quantum and Digital Ally

0.9

Correlation Coefficient

Quantum  Digital Ally

Almost no diversification

The 3 months correlation between Quantum and Digital is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Quantum and Digital Ally in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Digital Ally and 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 Quantum are associated (or correlated) with Digital Ally. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Digital Ally has no effect on the direction of Quantum i.e., Quantum and Digital Ally go up and down completely randomly.

Pair Corralation between Quantum and Digital Ally

Given the investment horizon of 90 days Quantum is expected to generate 1.07 times more return on investment than Digital Ally. However, Quantum is 1.07 times more volatile than Digital Ally. It trades about -0.12 of its potential returns per unit of risk. Digital Ally is currently generating about -0.28 per unit of risk. If you would invest  6,216  in Quantum on December 28, 2024 and sell it today you would lose (4,801) from holding Quantum or give up 77.24% of portfolio value over 90 days.

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

Quantum  vs.  Digital Ally

Quantum

Risk-Adjusted Performance

Very Weak

Over the last 90 days Quantum has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's fundamental indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Digital Ally

Risk-Adjusted Performance

Very Weak

Over the last 90 days Digital Ally has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's essential indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Quantum and Digital Ally

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

The idea behind Quantum and Digital Ally 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.