Correlation Between Q Gold and Rochester Resources

Can any of the company-specific risk be diversified away by investing in both Q Gold and Rochester Resources 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 Rochester Resources 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 Rochester Resources, you can compare the effects of market volatilities on Q Gold and Rochester Resources 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 Rochester Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Q Gold and Rochester Resources.

Diversification Opportunities for Q Gold and Rochester Resources

-0.07

Correlation Coefficient

Q Gold  Rochester Resources

Good diversification

The 3 months correlation between QGR and Rochester is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Q Gold Resources and Rochester Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rochester Resources 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 Rochester Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rochester Resources has no effect on the direction of Q Gold i.e., Q Gold and Rochester Resources go up and down completely randomly.

Pair Corralation between Q Gold and Rochester Resources

Assuming the 90 days horizon Q Gold Resources is expected to generate 0.69 times more return on investment than Rochester Resources. However, Q Gold Resources is 1.44 times less risky than Rochester Resources. It trades about 0.17 of its potential returns per unit of risk. Rochester Resources is currently generating about 0.02 per unit of risk. If you would invest  4.00  in Q Gold Resources on September 30, 2024 and sell it today you would earn a total of  10.00  from holding Q Gold Resources or generate 250.0% return on investment over 90 days.

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

Q Gold Resources  vs.  Rochester Resources

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.

Rochester Resources

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Rochester Resources has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly abnormal basic indicators, Rochester Resources may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Q Gold and Rochester Resources

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

The idea behind Q Gold Resources and Rochester 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.