Correlation Between Outcrop Gold and Q Gold

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

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

Diversification Opportunities for Outcrop Gold and Q Gold

0.47

Correlation Coefficient

Outcrop Gold  Q Gold

Very weak diversification

The 3 months correlation between Outcrop and QGR is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Outcrop Gold Corp 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 Outcrop Gold 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 Outcrop Gold Corp 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 Outcrop Gold i.e., Outcrop Gold and Q Gold go up and down completely randomly.

Pair Corralation between Outcrop Gold and Q Gold

Assuming the 90 days horizon Outcrop Gold Corp is expected to generate 0.58 times more return on investment than Q Gold. However, Outcrop Gold Corp is 1.73 times less risky than Q Gold. It trades about 0.21 of its potential returns per unit of risk. Q Gold Resources is currently generating about -0.18 per unit of risk. If you would invest  19.00  in Outcrop Gold Corp on October 20, 2024 and sell it today you would earn a total of  4.00  from holding Outcrop Gold Corp or generate 21.05% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.0%
Values	Daily Returns

Outcrop Gold Corp  vs.  Q Gold Resources

Outcrop Gold Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Outcrop Gold Corp 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.

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 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.

Pair Trading with Outcrop Gold and Q Gold

The main advantage of trading using opposite Outcrop Gold and Q Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Outcrop Gold 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 Outcrop Gold Corp 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.

Check out your portfolio center.

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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.