Correlation Between Alaska Energy and Quarterhill

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

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

Diversification Opportunities for Alaska Energy and Quarterhill

0.43

Correlation Coefficient

Alaska Energy  Quarterhill

Very weak diversification

The 3 months correlation between Alaska and Quarterhill is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Alaska Energy Metals and Quarterhill in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Quarterhill and Alaska Energy 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 Alaska Energy Metals are associated (or correlated) with Quarterhill. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Quarterhill has no effect on the direction of Alaska Energy i.e., Alaska Energy and Quarterhill go up and down completely randomly.

Pair Corralation between Alaska Energy and Quarterhill

Assuming the 90 days trading horizon Alaska Energy Metals is expected to under-perform the Quarterhill. In addition to that, Alaska Energy is 3.62 times more volatile than Quarterhill. It trades about -0.03 of its total potential returns per unit of risk. Quarterhill is currently generating about -0.02 per unit of volatility. If you would invest  183.00  in Quarterhill on October 2, 2024 and sell it today you would lose (27.00) from holding Quarterhill or give up 14.75% of portfolio value over 90 days.

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

Alaska Energy Metals  vs.  Quarterhill

Alaska Energy Metals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Alaska Energy Metals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's primary indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Quarterhill

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Quarterhill has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Alaska Energy and Quarterhill

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

The idea behind Alaska Energy Metals and Quarterhill 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.