Correlation Between QC Copper and Brunswick Exploration

Can any of the company-specific risk be diversified away by investing in both QC Copper and Brunswick Exploration 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 QC Copper and Brunswick Exploration into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between QC Copper and and Brunswick Exploration, you can compare the effects of market volatilities on QC Copper and Brunswick Exploration 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 QC Copper with a short position of Brunswick Exploration. Check out your portfolio center. Please also check ongoing floating volatility patterns of QC Copper and Brunswick Exploration.

Diversification Opportunities for QC Copper and Brunswick Exploration

0.33

Correlation Coefficient

QC Copper  Brunswick Exploration

Weak diversification

The 3 months correlation between QCCU and Brunswick is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding QC Copper and and Brunswick Exploration in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brunswick Exploration and QC Copper 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 QC Copper and are associated (or correlated) with Brunswick Exploration. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brunswick Exploration has no effect on the direction of QC Copper i.e., QC Copper and Brunswick Exploration go up and down completely randomly.

Pair Corralation between QC Copper and Brunswick Exploration

Assuming the 90 days trading horizon QC Copper and is expected to under-perform the Brunswick Exploration. But the stock apears to be less risky and, when comparing its historical volatility, QC Copper and is 1.84 times less risky than Brunswick Exploration. The stock trades about -0.01 of its potential returns per unit of risk. The Brunswick Exploration is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  14.00  in Brunswick Exploration on September 22, 2024 and sell it today you would earn a total of  2.00  from holding Brunswick Exploration or generate 14.29% return on investment over 90 days.

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

QC Copper and  vs.  Brunswick Exploration

QC Copper

Risk-Adjusted Performance

0 of 100

Very Weak

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

Brunswick Exploration

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Brunswick Exploration are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, Brunswick Exploration showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with QC Copper and Brunswick Exploration

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

The idea behind QC Copper and and Brunswick Exploration 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.