Correlation Between Québec Nickel and Kraken Energy

Can any of the company-specific risk be diversified away by investing in both Québec 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 Québec 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 Québec 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 Québec Nickel with a short position of Kraken Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Québec Nickel and Kraken Energy.

Diversification Opportunities for Québec Nickel and Kraken Energy

-0.03

Correlation Coefficient

Québec Nickel  Kraken Energy

Good diversification

The 3 months correlation between Québec and Kraken is -0.03. 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 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 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 Québec Nickel i.e., Québec Nickel and Kraken Energy go up and down completely randomly.

Pair Corralation between Québec Nickel and Kraken Energy

Assuming the 90 days horizon Qubec Nickel Corp is expected to under-perform the Kraken Energy. In addition to that, Québec Nickel is 1.52 times more volatile than Kraken Energy Corp. It trades about -0.01 of its total potential returns per unit of risk. Kraken Energy Corp is currently generating about -0.01 per unit of volatility. If you would invest  3.57  in Kraken Energy Corp on September 3, 2024 and sell it today you would lose (0.92) from holding Kraken Energy Corp or give up 25.77% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.46%
Values	Daily Returns

Qubec Nickel Corp  vs.  Kraken Energy Corp

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.

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 nearly stable basic indicators, Kraken Energy 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 Kraken Energy

The main advantage of trading using opposite Québec Nickel and Kraken Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Québec 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.