Correlation Between Q Gold and Northern Superior

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

Diversification Opportunities for Q Gold and Northern Superior

0.36

Correlation Coefficient

Q Gold  Northern Superior

Weak diversification

The 3 months correlation between QGR and Northern is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Q Gold Resources and Northern Superior Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Northern Superior 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 Northern Superior. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Northern Superior has no effect on the direction of Q Gold i.e., Q Gold and Northern Superior go up and down completely randomly.

Pair Corralation between Q Gold and Northern Superior

Assuming the 90 days horizon Q Gold Resources is expected to under-perform the Northern Superior. In addition to that, Q Gold is 2.68 times more volatile than Northern Superior Resources. It trades about -0.02 of its total potential returns per unit of risk. Northern Superior Resources is currently generating about -0.02 per unit of volatility. If you would invest  54.00  in Northern Superior Resources on October 3, 2024 and sell it today you would lose (4.00) from holding Northern Superior Resources or give up 7.41% of portfolio value over 90 days.

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

Q Gold Resources  vs.  Northern Superior Resources

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 abnormal 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.

Northern Superior

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Northern Superior Resources has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Northern Superior is not utilizing all of its potentials. The recent stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Q Gold and Northern Superior

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

The idea behind Q Gold Resources and Northern Superior 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.