Correlation Between Wormhole and QKC

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Can any of the company-specific risk be diversified away by investing in both Wormhole 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 Wormhole and QKC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Wormhole and QKC, you can compare the effects of market volatilities on Wormhole 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 Wormhole with a short position of QKC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wormhole and QKC.

Diversification Opportunities for Wormhole and QKC

WormholeQKCDiversified AwayWormholeQKCDiversified Away100%
0.72
  Correlation Coefficient

Poor diversification

The 3 months correlation between Wormhole and QKC is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Wormhole and QKC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on QKC and Wormhole 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 Wormhole 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 Wormhole i.e., Wormhole and QKC go up and down completely randomly.

Pair Corralation between Wormhole and QKC

Given the investment horizon of 90 days Wormhole is expected to under-perform the QKC. In addition to that, Wormhole is 1.33 times more volatile than QKC. It trades about -0.17 of its total potential returns per unit of risk. QKC is currently generating about -0.11 per unit of volatility. If you would invest  1.04  in QKC on November 23, 2024 and sell it today you would lose (0.17) from holding QKC or give up 16.06% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Wormhole  vs.  QKC

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb -40-200204060
JavaScript chart by amCharts 3.21.15W QKC
       Timeline  
Wormhole 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Wormhole 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 Wormhole shareholders.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb0.20.250.30.350.4
QKC 

Risk-Adjusted Performance

Weak

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in QKC are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, QKC exhibited solid returns over the last few months and may actually be approaching a breakup point.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb0.0080.0090.010.0110.0120.0130.014

Wormhole and QKC Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-11.48-8.6-5.72-2.83-0.04622.685.468.2311.0113.78 0.0020.0030.0040.0050.0060.0070.008
JavaScript chart by amCharts 3.21.15W QKC
       Returns  

Pair Trading with Wormhole and QKC

The main advantage of trading using opposite Wormhole and QKC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wormhole 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 Wormhole 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.
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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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.

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