Correlation Between Q Gold and K2 Gold

Can any of the company-specific risk be diversified away by investing in both Q Gold and K2 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 Q Gold and K2 Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Q Gold Resources and K2 Gold, you can compare the effects of market volatilities on Q Gold and K2 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 Q Gold with a short position of K2 Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Q Gold and K2 Gold.

Diversification Opportunities for Q Gold and K2 Gold

-0.3

Correlation Coefficient

Q Gold  K2 Gold

Very good diversification

The 3 months correlation between QGR and KTO is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Q Gold Resources and K2 Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on K2 Gold and Q 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 Q Gold Resources are associated (or correlated) with K2 Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of K2 Gold has no effect on the direction of Q Gold i.e., Q Gold and K2 Gold go up and down completely randomly.

Pair Corralation between Q Gold and K2 Gold

Assuming the 90 days horizon Q Gold Resources is expected to generate 2.29 times more return on investment than K2 Gold. However, Q Gold is 2.29 times more volatile than K2 Gold. It trades about 0.1 of its potential returns per unit of risk. K2 Gold is currently generating about 0.04 per unit of risk. If you would invest  3.00  in Q Gold Resources on September 23, 2024 and sell it today you would earn a total of  13.00  from holding Q Gold Resources or generate 433.33% return on investment over 90 days.

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

Q Gold Resources  vs.  K2 Gold

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 fairly stable basic indicators, Q Gold is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

K2 Gold

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in K2 Gold are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, K2 Gold showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Q Gold and K2 Gold

The main advantage of trading using opposite Q Gold and K2 Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Q Gold position performs unexpectedly, K2 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 K2 Gold will offset losses from the drop in K2 Gold's long position.

The idea behind Q Gold Resources and K2 Gold 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.