Correlation Between Québec Nickel and Kenorland Minerals

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

Diversification Opportunities for Québec Nickel and Kenorland Minerals

0.49

Correlation Coefficient

Québec Nickel  Kenorland Minerals

Very weak diversification

The 3 months correlation between Québec and Kenorland is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Qubec Nickel Corp and Kenorland Minerals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kenorland Minerals 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 Kenorland Minerals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kenorland Minerals has no effect on the direction of Québec Nickel i.e., Québec Nickel and Kenorland Minerals go up and down completely randomly.

Pair Corralation between Québec Nickel and Kenorland Minerals

Assuming the 90 days horizon Qubec Nickel Corp is expected to generate 4.67 times more return on investment than Kenorland Minerals. However, Québec Nickel is 4.67 times more volatile than Kenorland Minerals. It trades about 0.03 of its potential returns per unit of risk. Kenorland Minerals is currently generating about 0.04 per unit of risk. If you would invest  25.00  in Qubec Nickel Corp on September 10, 2024 and sell it today you would lose (23.25) from holding Qubec Nickel Corp or give up 93.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	99.72%
Values	Daily Returns

Qubec Nickel Corp  vs.  Kenorland Minerals

Qubec Nickel Corp

Risk-Adjusted Performance

0 of 100

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 latest weak performance, the Stock's fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Kenorland Minerals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kenorland Minerals has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable fundamental indicators, Kenorland Minerals is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Québec Nickel and Kenorland Minerals

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

The idea behind Qubec Nickel Corp and Kenorland Minerals 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.