Correlation Between Hercules Metals and Q Gold

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

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

Diversification Opportunities for Hercules Metals and Q Gold

0.05

Correlation Coefficient

Hercules Metals  Q Gold

Significant diversification

The 3 months correlation between Hercules and QGR is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Hercules Metals Corp and Q Gold Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Q Gold Resources and Hercules 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 Hercules Metals Corp are associated (or correlated) with Q Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Q Gold Resources has no effect on the direction of Hercules Metals i.e., Hercules Metals and Q Gold go up and down completely randomly.

Pair Corralation between Hercules Metals and Q Gold

Assuming the 90 days horizon Hercules Metals Corp is expected to under-perform the Q Gold. But the stock apears to be less risky and, when comparing its historical volatility, Hercules Metals Corp is 1.77 times less risky than Q Gold. The stock trades about 0.0 of its potential returns per unit of risk. The Q Gold Resources is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  16.00  in Q Gold Resources on September 29, 2024 and sell it today you would lose (2.00) from holding Q Gold Resources or give up 12.5% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

Hercules Metals Corp  vs.  Q Gold Resources

Hercules Metals Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hercules Metals Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Hercules Metals is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Q Gold Resources

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Q Gold Resources are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Q Gold may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Hercules Metals and Q Gold

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

The idea behind Hercules Metals Corp and Q Gold Resources 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.