Correlation Between Québec Nickel and Atacama Resources

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

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

Diversification Opportunities for Québec Nickel and Atacama Resources

0.16

Correlation Coefficient

Québec Nickel  Atacama Resources

Average diversification

The 3 months correlation between Québec and Atacama is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Qubec Nickel Corp and Atacama Resources Internationa in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Atacama Resources and Québec Nickel 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 Qubec Nickel Corp are associated (or correlated) with Atacama Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Atacama Resources has no effect on the direction of Québec Nickel i.e., Québec Nickel and Atacama Resources go up and down completely randomly.

Pair Corralation between Québec Nickel and Atacama Resources

Assuming the 90 days horizon Qubec Nickel Corp is expected to generate 1.67 times more return on investment than Atacama Resources. However, Québec Nickel is 1.67 times more volatile than Atacama Resources International. It trades about 0.04 of its potential returns per unit of risk. Atacama Resources International is currently generating about 0.03 per unit of risk. If you would invest  80.00  in Qubec Nickel Corp on December 4, 2024 and sell it today you would lose (73.56) from holding Qubec Nickel Corp or give up 91.95% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	99.0%
Values	Daily Returns

Qubec Nickel Corp  vs.  Atacama Resources Internationa

Qubec Nickel Corp

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Qubec Nickel Corp are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak fundamental indicators, Québec Nickel reported solid returns over the last few months and may actually be approaching a breakup point.

Atacama Resources

Risk-Adjusted Performance

Very Weak

Over the last 90 days Atacama Resources International has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Atacama Resources is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Québec Nickel and Atacama Resources

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

The idea behind Qubec Nickel Corp and Atacama Resources International 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.