Correlation Between QC Copper and K2 Gold

Can any of the company-specific risk be diversified away by investing in both QC Copper and K2 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 QC Copper and K2 Gold 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 K2 Gold, you can compare the effects of market volatilities on QC Copper and K2 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 QC Copper with a short position of K2 Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of QC Copper and K2 Gold.

Diversification Opportunities for QC Copper and K2 Gold

-0.26

Correlation Coefficient

QC Copper  K2 Gold

Very good diversification

The 3 months correlation between QCCU and KTO is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding QC Copper and and K2 Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on K2 Gold 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 K2 Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of K2 Gold has no effect on the direction of QC Copper i.e., QC Copper and K2 Gold go up and down completely randomly.

Pair Corralation between QC Copper and K2 Gold

Assuming the 90 days trading horizon QC Copper is expected to generate 1.91 times less return on investment than K2 Gold. But when comparing it to its historical volatility, QC Copper and is 1.35 times less risky than K2 Gold. It trades about 0.02 of its potential returns per unit of risk. K2 Gold is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  12.00  in K2 Gold on September 22, 2024 and sell it today you would earn a total of  0.00  from holding K2 Gold or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

QC Copper and  vs.  K2 Gold

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.

K2 Gold

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in K2 Gold are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, K2 Gold showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with QC Copper and K2 Gold

The main advantage of trading using opposite QC Copper and K2 Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if QC Copper position performs unexpectedly, K2 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 K2 Gold will offset losses from the drop in K2 Gold's long position.

The idea behind QC Copper and and K2 Gold 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.