Correlation Between Quebec Precious and Cabral Gold

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

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

Diversification Opportunities for Quebec Precious and Cabral Gold

-0.78

Correlation Coefficient

Quebec Precious  Cabral Gold

Pay attention - limited upside

The 3 months correlation between Quebec and Cabral is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding Quebec Precious Metals and Cabral Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cabral Gold and Quebec Precious 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 Quebec Precious Metals are associated (or correlated) with Cabral Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cabral Gold has no effect on the direction of Quebec Precious i.e., Quebec Precious and Cabral Gold go up and down completely randomly.

Pair Corralation between Quebec Precious and Cabral Gold

Assuming the 90 days horizon Quebec Precious Metals is expected to generate 0.82 times more return on investment than Cabral Gold. However, Quebec Precious Metals is 1.22 times less risky than Cabral Gold. It trades about 0.15 of its potential returns per unit of risk. Cabral Gold is currently generating about -0.02 per unit of risk. If you would invest  2.00  in Quebec Precious Metals on September 1, 2024 and sell it today you would earn a total of  1.40  from holding Quebec Precious Metals or generate 70.0% return on investment over 90 days.

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

Quebec Precious Metals  vs.  Cabral Gold

Quebec Precious Metals

Risk-Adjusted Performance

12 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Quebec Precious Metals are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, Quebec Precious reported solid returns over the last few months and may actually be approaching a breakup point.

Cabral Gold

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cabral Gold has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Quebec Precious and Cabral Gold

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

The idea behind Quebec Precious Metals and Cabral Gold 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.