Correlation Between Kenorland Minerals and Québec Nickel

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

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

Diversification Opportunities for Kenorland Minerals and Québec Nickel

0.49

Correlation Coefficient

Kenorland Minerals  Québec Nickel

Very weak diversification

The 3 months correlation between Kenorland and Québec is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Kenorland Minerals 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 Kenorland Minerals 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 Kenorland Minerals 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 Kenorland Minerals i.e., Kenorland Minerals and Québec Nickel go up and down completely randomly.

Pair Corralation between Kenorland Minerals and Québec Nickel

Assuming the 90 days horizon Kenorland Minerals is expected to generate 2.56 times less return on investment than Québec Nickel. But when comparing it to its historical volatility, Kenorland Minerals is 4.64 times less risky than Québec Nickel. It trades about 0.04 of its potential returns per unit of risk. Qubec Nickel Corp is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  39.00  in Qubec Nickel Corp on September 9, 2024 and sell it today you would lose (37.25) from holding Qubec Nickel Corp or give up 95.51% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	99.73%
Values	Daily Returns

Kenorland Minerals  vs.  Qubec Nickel Corp

Kenorland Minerals

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Kenorland Minerals has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable fundamental indicators, Kenorland Minerals is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Qubec Nickel Corp

Risk-Adjusted Performance

0 of 100

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 nearly stable fundamental indicators, Québec Nickel is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Kenorland Minerals and Québec Nickel

The main advantage of trading using opposite Kenorland Minerals and Québec Nickel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kenorland Minerals 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 Kenorland Minerals 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.