Correlation Between Leading Edge and Q Gold

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

Diversification Opportunities for Leading Edge and Q Gold

LeadingQGRDiversified AwayLeadingQGRDiversified Away100%
0.59
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Leading and QGR is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Leading Edge Materials and Q Gold Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Q Gold Resources and Leading Edge 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 Leading Edge Materials are associated (or correlated) with Q Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Q Gold Resources has no effect on the direction of Leading Edge i.e., Leading Edge and Q Gold go up and down completely randomly.

Pair Corralation between Leading Edge and Q Gold

Assuming the 90 days horizon Leading Edge Materials is expected to generate 0.47 times more return on investment than Q Gold. However, Leading Edge Materials is 2.11 times less risky than Q Gold. It trades about -0.07 of its potential returns per unit of risk. Q Gold Resources is currently generating about -0.06 per unit of risk. If you would invest  11.00  in Leading Edge Materials on October 25, 2024 and sell it today you would lose (2.00) from holding Leading Edge Materials or give up 18.18% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Leading Edge Materials  vs.  Q Gold Resources

 Performance 
JavaScript chart by amCharts 3.21.15NovDec2025 -30-20-10010203040
JavaScript chart by amCharts 3.21.15LEM QGR
       Timeline  
Leading Edge Materials 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Leading Edge Materials 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 basic indicators remain fairly stable which may send shares a bit higher in February 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.
JavaScript chart by amCharts 3.21.15NovDecJanDecJan0.0850.090.0950.10.1050.11
Q Gold Resources 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Q Gold Resources has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in February 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.
JavaScript chart by amCharts 3.21.15NovDecJanDecJan0.080.10.120.140.160.18

Leading Edge and Q Gold Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-6.6-4.94-3.28-1.630.01.543.114.686.25 0.0050.0100.0150.0200.025
JavaScript chart by amCharts 3.21.15LEM QGR
       Returns  

Pair Trading with Leading Edge and Q Gold

The main advantage of trading using opposite Leading Edge and Q Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Leading Edge position performs unexpectedly, Q 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 Q Gold will offset losses from the drop in Q Gold's long position.
The idea behind Leading Edge Materials and Q Gold Resources 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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.

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