Correlation Between Magna Mining and Q Gold

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

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

Diversification Opportunities for Magna Mining and Q Gold

-0.58

Correlation Coefficient

Magna Mining  Q Gold

Excellent diversification

The 3 months correlation between Magna and QGR is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Magna Mining 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 Magna Mining 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 Magna Mining 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 Magna Mining i.e., Magna Mining and Q Gold go up and down completely randomly.

Pair Corralation between Magna Mining and Q Gold

Assuming the 90 days trading horizon Magna Mining is expected to generate 3.05 times less return on investment than Q Gold. But when comparing it to its historical volatility, Magna Mining is 2.45 times less risky than Q Gold. It trades about 0.15 of its potential returns per unit of risk. Q Gold Resources is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  2.50  in Q Gold Resources on October 8, 2024 and sell it today you would earn a total of  11.50  from holding Q Gold Resources or generate 460.0% return on investment over 90 days.

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

Magna Mining  vs.  Q Gold Resources

Magna Mining

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Magna Mining are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal fundamental indicators, Magna Mining showed solid returns over the last few months and may actually be approaching a breakup point.

Q Gold Resources

Risk-Adjusted Performance

0 of 100

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 latest uncertain performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pair Trading with Magna Mining and Q Gold

The main advantage of trading using opposite Magna Mining and Q Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Magna Mining 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 Magna Mining 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 Anywhere module to track or share privately all of your investments from the convenience of any device.