Correlation Between Quantum Numbers and Premium Income

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

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

Diversification Opportunities for Quantum Numbers and Premium Income

-0.26

Correlation Coefficient

Quantum Numbers  Premium Income

Very good diversification

The 3 months correlation between Quantum and Premium is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Quantum Numbers and Premium Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Premium Income and Quantum Numbers 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 Numbers are associated (or correlated) with Premium Income. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Premium Income has no effect on the direction of Quantum Numbers i.e., Quantum Numbers and Premium Income go up and down completely randomly.

Pair Corralation between Quantum Numbers and Premium Income

Assuming the 90 days horizon Quantum Numbers is expected to generate 4.88 times more return on investment than Premium Income. However, Quantum Numbers is 4.88 times more volatile than Premium Income. It trades about 0.09 of its potential returns per unit of risk. Premium Income is currently generating about -0.03 per unit of risk. If you would invest  8.50  in Quantum Numbers on October 15, 2024 and sell it today you would earn a total of  81.50  from holding Quantum Numbers or generate 958.82% return on investment over 90 days.

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

Quantum Numbers  vs.  Premium Income

Quantum Numbers

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Quantum Numbers are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Quantum Numbers showed solid returns over the last few months and may actually be approaching a breakup point.

Premium Income

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Premium Income has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Premium Income is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Quantum Numbers and Premium Income

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

The idea behind Quantum Numbers and Premium Income 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.