Correlation Between Québec Nickel and Evergold Corp

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

Diversification Opportunities for Québec Nickel and Evergold Corp

0.35

Correlation Coefficient

Québec Nickel  Evergold Corp

Weak diversification

The 3 months correlation between Québec and Evergold is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Qubec Nickel Corp and Evergold Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Evergold Corp 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 Evergold Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Evergold Corp has no effect on the direction of Québec Nickel i.e., Québec Nickel and Evergold Corp go up and down completely randomly.

Pair Corralation between Québec Nickel and Evergold Corp

Assuming the 90 days horizon Qubec Nickel Corp is expected to generate 3.46 times more return on investment than Evergold Corp. However, Québec Nickel is 3.46 times more volatile than Evergold Corp. It trades about 0.13 of its potential returns per unit of risk. Evergold Corp is currently generating about 0.09 per unit of risk. If you would invest  1.75  in Qubec Nickel Corp on December 3, 2024 and sell it today you would earn a total of  4.69  from holding Qubec Nickel Corp or generate 268.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.31%
Values	Daily Returns

Qubec Nickel Corp  vs.  Evergold Corp

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.

Evergold Corp

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Evergold Corp are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Evergold Corp reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Québec Nickel and Evergold Corp

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

The idea behind Qubec Nickel Corp and Evergold Corp 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.