Correlation Between Pilbara Minerals and Qubec Nickel

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

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

Diversification Opportunities for Pilbara Minerals and Qubec Nickel

0.52

Correlation Coefficient

Pilbara Minerals  Qubec Nickel

Very weak diversification

The 3 months correlation between Pilbara and Qubec is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Pilbara Minerals Limited 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 Pilbara 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 Pilbara Minerals Limited are associated (or correlated) with Qubec 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 Pilbara Minerals i.e., Pilbara Minerals and Qubec Nickel go up and down completely randomly.

Pair Corralation between Pilbara Minerals and Qubec Nickel

Assuming the 90 days horizon Pilbara Minerals Limited is expected to under-perform the Qubec Nickel. But the pink sheet apears to be less risky and, when comparing its historical volatility, Pilbara Minerals Limited is 13.21 times less risky than Qubec Nickel. The pink sheet trades about -0.1 of its potential returns per unit of risk. The Qubec Nickel Corp is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  8.28  in Qubec Nickel Corp on September 14, 2024 and sell it today you would earn a total of  0.01  from holding Qubec Nickel Corp or generate 0.12% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.44%
Values	Daily Returns

Pilbara Minerals Limited  vs.  Qubec Nickel Corp

Pilbara Minerals

Risk-Adjusted Performance

0 of 100

Very Weak

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

Qubec Nickel Corp

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Qubec Nickel Corp are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak fundamental indicators, Qubec Nickel reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Pilbara Minerals and Qubec Nickel

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

The idea behind Pilbara Minerals Limited 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.