Correlation Between Q Gold and Rackla Metals

Can any of the company-specific risk be diversified away by investing in both Q Gold and Rackla Metals 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 Rackla Metals 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 Rackla Metals, you can compare the effects of market volatilities on Q Gold and Rackla Metals 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 Rackla Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Q Gold and Rackla Metals.

Diversification Opportunities for Q Gold and Rackla Metals

-0.46

Correlation Coefficient

Q Gold  Rackla Metals

Very good diversification

The 3 months correlation between QGR and Rackla is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Q Gold Resources and Rackla Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rackla Metals 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 Rackla Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rackla Metals has no effect on the direction of Q Gold i.e., Q Gold and Rackla Metals go up and down completely randomly.

Pair Corralation between Q Gold and Rackla Metals

Assuming the 90 days horizon Q Gold Resources is expected to generate 1.22 times more return on investment than Rackla Metals. However, Q Gold is 1.22 times more volatile than Rackla Metals. It trades about 0.08 of its potential returns per unit of risk. Rackla Metals is currently generating about 0.06 per unit of risk. If you would invest  7.00  in Q Gold Resources on October 2, 2024 and sell it today you would earn a total of  7.00  from holding Q Gold Resources or generate 100.0% return on investment over 90 days.

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

Q Gold Resources  vs.  Rackla Metals

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.

Rackla Metals

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Rackla Metals are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, Rackla Metals showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Q Gold and Rackla Metals

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

The idea behind Q Gold Resources and Rackla Metals 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.