Correlation Between Québec Nickel and Core Lithium

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

Diversification Opportunities for Québec Nickel and Core Lithium

0.55

Correlation Coefficient

Québec Nickel  Core Lithium

Very weak diversification

The 3 months correlation between Québec and Core is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Qubec Nickel Corp and Core Lithium in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Core Lithium 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 Core Lithium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Core Lithium has no effect on the direction of Québec Nickel i.e., Québec Nickel and Core Lithium go up and down completely randomly.

Pair Corralation between Québec Nickel and Core Lithium

Assuming the 90 days horizon Qubec Nickel Corp is expected to under-perform the Core Lithium. In addition to that, Québec Nickel is 1.48 times more volatile than Core Lithium. It trades about -0.21 of its total potential returns per unit of risk. Core Lithium is currently generating about -0.02 per unit of volatility. If you would invest  5.80  in Core Lithium on December 28, 2024 and sell it today you would lose (0.79) from holding Core Lithium or give up 13.62% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.65%
Values	Daily Returns

Qubec Nickel Corp  vs.  Core Lithium

Qubec Nickel Corp

Risk-Adjusted Performance

Very Weak

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

Core Lithium

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Core Lithium are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Core Lithium reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Québec Nickel and Core Lithium

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

The idea behind Qubec Nickel Corp and Core Lithium 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.