Correlation Between Q Gold and Lion One

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

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

Diversification Opportunities for Q Gold and Lion One

0.53

Correlation Coefficient

Q Gold  Lion One

Very weak diversification

The 3 months correlation between QGR and Lion is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Q Gold Resources and Lion One Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lion One Metals and Q Gold 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 Q Gold Resources are associated (or correlated) with Lion One. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lion One Metals has no effect on the direction of Q Gold i.e., Q Gold and Lion One go up and down completely randomly.

Pair Corralation between Q Gold and Lion One

Assuming the 90 days horizon Q Gold Resources is expected to generate 4.97 times more return on investment than Lion One. However, Q Gold is 4.97 times more volatile than Lion One Metals. It trades about 0.1 of its potential returns per unit of risk. Lion One Metals is currently generating about -0.05 per unit of risk. If you would invest  3.00  in Q Gold Resources on September 24, 2024 and sell it today you would earn a total of  13.00  from holding Q Gold Resources or generate 433.33% return on investment over 90 days.

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

Q Gold Resources  vs.  Lion One Metals

Q Gold Resources

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Q Gold Resources has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

Lion One Metals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lion One Metals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pair Trading with Q Gold and Lion One

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

The idea behind Q Gold Resources and Lion One Metals 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.

Check out your portfolio center.

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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.