Correlation Between Qubec Nickel and Kraken Energy

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

Diversification Opportunities for Qubec Nickel and Kraken Energy

0.19

Correlation Coefficient

Qubec Nickel  Kraken Energy

Average diversification

The 3 months correlation between Qubec and Kraken is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Qubec Nickel Corp and Kraken Energy Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kraken Energy Corp and Qubec 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 Kraken Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kraken Energy Corp has no effect on the direction of Qubec Nickel i.e., Qubec Nickel and Kraken Energy go up and down completely randomly.

Pair Corralation between Qubec Nickel and Kraken Energy

Assuming the 90 days horizon Qubec Nickel Corp is expected to generate 4.16 times more return on investment than Kraken Energy. However, Qubec Nickel is 4.16 times more volatile than Kraken Energy Corp. It trades about 0.11 of its potential returns per unit of risk. Kraken Energy Corp is currently generating about -0.02 per unit of risk. If you would invest  8.28  in Qubec Nickel Corp on October 21, 2024 and sell it today you would lose (1.13) from holding Qubec Nickel Corp or give up 13.65% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.38%
Values	Daily Returns

Qubec Nickel Corp  vs.  Kraken Energy Corp

Qubec Nickel Corp

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Qubec Nickel Corp are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak fundamental indicators, Qubec Nickel reported solid returns over the last few months and may actually be approaching a breakup point.

Kraken Energy Corp

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Qubec Nickel and Kraken Energy

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

The idea behind Qubec Nickel Corp and Kraken Energy 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.