Correlation Between Québec Nickel and Metals X

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

Diversification Opportunities for Québec Nickel and Metals X

-0.22

Correlation Coefficient

Québec Nickel  Metals X

Very good diversification

The 3 months correlation between Québec and Metals is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Qubec Nickel Corp and Metals X Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Metals X Limited 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 Metals X. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Metals X Limited has no effect on the direction of Québec Nickel i.e., Québec Nickel and Metals X go up and down completely randomly.

Pair Corralation between Québec Nickel and Metals X

Assuming the 90 days horizon Qubec Nickel Corp is expected to generate 7.49 times more return on investment than Metals X. However, Québec Nickel is 7.49 times more volatile than Metals X Limited. It trades about 0.13 of its potential returns per unit of risk. Metals X Limited is currently generating about 0.07 per unit of risk. If you would invest  1.75  in Qubec Nickel Corp on December 1, 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 Against
Strength	Insignificant
Accuracy	95.31%
Values	Daily Returns

Qubec Nickel Corp  vs.  Metals X Limited

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.

Metals X Limited

Risk-Adjusted Performance

Modest

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

Pair Trading with Québec Nickel and Metals X

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

The idea behind Qubec Nickel Corp and Metals X Limited 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.

Check out your portfolio center.

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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.