Correlation Between Q Gold and Radius Gold

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

Diversification Opportunities for Q Gold and Radius Gold

0.26

Correlation Coefficient

Q Gold  Radius Gold

Modest diversification

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

Pair Corralation between Q Gold and Radius Gold

Assuming the 90 days horizon Q Gold Resources is expected to generate 2.31 times more return on investment than Radius Gold. However, Q Gold is 2.31 times more volatile than Radius Gold. It trades about 0.12 of its potential returns per unit of risk. Radius Gold is currently generating about 0.01 per unit of risk. If you would invest  2.00  in Q Gold Resources on September 23, 2024 and sell it today you would earn a total of  14.00  from holding Q Gold Resources or generate 700.0% return on investment over 90 days.

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

Q Gold Resources  vs.  Radius Gold

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 stable basic indicators, Q Gold is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Radius Gold

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Radius Gold 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 Radius Gold

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

The idea behind Q Gold Resources and Radius 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.