Correlation Between Ceylon Graphite and Québec Nickel

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

By analyzing existing cross correlation between Ceylon Graphite Corp and Qubec Nickel Corp, you can compare the effects of market volatilities on Ceylon Graphite and Québec Nickel 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 Ceylon Graphite with a short position of Québec Nickel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ceylon Graphite and Québec Nickel.

Diversification Opportunities for Ceylon Graphite and Québec Nickel

-0.27

Correlation Coefficient

Ceylon Graphite  Québec Nickel

Very good diversification

The 3 months correlation between Ceylon and Québec is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Ceylon Graphite Corp and Qubec Nickel Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Qubec Nickel Corp and Ceylon Graphite 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 Ceylon Graphite Corp are associated (or correlated) with Québec Nickel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Qubec Nickel Corp has no effect on the direction of Ceylon Graphite i.e., Ceylon Graphite and Québec Nickel go up and down completely randomly.

Pair Corralation between Ceylon Graphite and Québec Nickel

Assuming the 90 days horizon Ceylon Graphite Corp is expected to generate 1.57 times more return on investment than Québec Nickel. However, Ceylon Graphite is 1.57 times more volatile than Qubec Nickel Corp. It trades about 0.14 of its potential returns per unit of risk. Qubec Nickel Corp is currently generating about -0.02 per unit of risk. If you would invest  1.11  in Ceylon Graphite Corp on December 29, 2024 and sell it today you would lose (0.31) from holding Ceylon Graphite Corp or give up 27.93% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	96.88%
Values	Daily Returns

Ceylon Graphite Corp  vs.  Qubec Nickel Corp

Ceylon Graphite Corp

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Ceylon Graphite Corp are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Ceylon Graphite reported solid returns over the last few months and may actually be approaching a breakup point.

Qubec Nickel Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Qubec Nickel Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's fundamental indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Ceylon Graphite and Québec Nickel

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

The idea behind Ceylon Graphite Corp and Qubec Nickel Corp 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.