Correlation Between Talon Metals and Queens Road

Can any of the company-specific risk be diversified away by investing in both Talon Metals and Queens Road 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 Talon Metals and Queens Road into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Talon Metals Corp and Queens Road Capital, you can compare the effects of market volatilities on Talon Metals and Queens Road 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 Talon Metals with a short position of Queens Road. Check out your portfolio center. Please also check ongoing floating volatility patterns of Talon Metals and Queens Road.

Diversification Opportunities for Talon Metals and Queens Road

0.3

Correlation Coefficient

Talon Metals  Queens Road

Weak diversification

The 3 months correlation between Talon and Queens is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Talon Metals Corp and Queens Road Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Queens Road Capital and Talon Metals 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 Talon Metals Corp are associated (or correlated) with Queens Road. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Queens Road Capital has no effect on the direction of Talon Metals i.e., Talon Metals and Queens Road go up and down completely randomly.

Pair Corralation between Talon Metals and Queens Road

Assuming the 90 days trading horizon Talon Metals Corp is expected to generate 1.93 times more return on investment than Queens Road. However, Talon Metals is 1.93 times more volatile than Queens Road Capital. It trades about 0.02 of its potential returns per unit of risk. Queens Road Capital is currently generating about 0.04 per unit of risk. If you would invest  9.00  in Talon Metals Corp on September 12, 2024 and sell it today you would earn a total of  0.00  from holding Talon Metals Corp or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

Talon Metals Corp  vs.  Queens Road Capital

Talon Metals Corp

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Talon Metals Corp are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Talon Metals is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Queens Road Capital

Risk-Adjusted Performance

3 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Queens Road Capital are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy fundamental indicators, Queens Road is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Talon Metals and Queens Road

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

The idea behind Talon Metals Corp and Queens Road Capital 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.