Correlation Between MLN and QKC
Can any of the company-specific risk be diversified away by investing in both MLN and QKC 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 MLN and QKC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MLN and QKC, you can compare the effects of market volatilities on MLN and QKC 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 MLN with a short position of QKC. Check out your portfolio center. Please also check ongoing floating volatility patterns of MLN and QKC.
Diversification Opportunities for MLN and QKC
Very weak diversification
The 3 months correlation between MLN and QKC is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding MLN and QKC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on QKC and MLN 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 MLN are associated (or correlated) with QKC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of QKC has no effect on the direction of MLN i.e., MLN and QKC go up and down completely randomly.
Pair Corralation between MLN and QKC
Assuming the 90 days trading horizon MLN is expected to under-perform the QKC. But the crypto coin apears to be less risky and, when comparing its historical volatility, MLN is 1.57 times less risky than QKC. The crypto coin trades about -0.35 of its potential returns per unit of risk. The QKC is currently generating about -0.15 of returns per unit of risk over similar time horizon. If you would invest 1.05 in QKC on November 8, 2024 and sell it today you would lose (0.25) from holding QKC or give up 24.22% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
MLN vs. QKC
Performance |
| Timeline |
| MLN |
| QKC |
MLN and QKC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MLN and QKC
The main advantage of trading using opposite MLN and QKC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MLN position performs unexpectedly, QKC 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 QKC will offset losses from the drop in QKC's long position.The idea behind MLN and QKC 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
Other Complementary Tools
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Top Crypto Exchanges Search and analyze digital assets across top global cryptocurrency exchanges | |
| Technical Analysis Check basic technical indicators and analysis based on most latest market data | |
| Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities |