Correlation Between Canaf Investments and Q Gold

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

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

Diversification Opportunities for Canaf Investments and Q Gold

0.26

Correlation Coefficient

Canaf Investments  Q Gold

Modest diversification

The 3 months correlation between Canaf and QGR is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Canaf Investments 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 Canaf Investments 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 Canaf Investments 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 Canaf Investments i.e., Canaf Investments and Q Gold go up and down completely randomly.

Pair Corralation between Canaf Investments and Q Gold

Assuming the 90 days horizon Canaf Investments is expected to generate 0.53 times more return on investment than Q Gold. However, Canaf Investments is 1.87 times less risky than Q Gold. It trades about -0.05 of its potential returns per unit of risk. Q Gold Resources is currently generating about -0.11 per unit of risk. If you would invest  31.00  in Canaf Investments on September 5, 2024 and sell it today you would lose (2.00) from holding Canaf Investments or give up 6.45% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Canaf Investments  vs.  Q Gold Resources

Canaf Investments

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Canaf Investments are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Canaf Investments is not utilizing all of its potentials. The recent stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Q Gold Resources

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Q Gold Resources are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, Q Gold showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Canaf Investments and Q Gold

The main advantage of trading using opposite Canaf Investments and Q Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Canaf Investments 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 Canaf Investments 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.