Correlation Between QMC Quantum and American Lithium

Can any of the company-specific risk be diversified away by investing in both QMC Quantum and American Lithium 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 QMC Quantum and American Lithium into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between QMC Quantum Minerals and American Lithium Corp, you can compare the effects of market volatilities on QMC Quantum and American Lithium 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 QMC Quantum with a short position of American Lithium. Check out your portfolio center. Please also check ongoing floating volatility patterns of QMC Quantum and American Lithium.

Diversification Opportunities for QMC Quantum and American Lithium

-0.24

Correlation Coefficient

QMC Quantum  American Lithium

Very good diversification

The 3 months correlation between QMC and American is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding QMC Quantum Minerals and American Lithium Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Lithium Corp and QMC Quantum 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 QMC Quantum Minerals are associated (or correlated) with American Lithium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Lithium Corp has no effect on the direction of QMC Quantum i.e., QMC Quantum and American Lithium go up and down completely randomly.

Pair Corralation between QMC Quantum and American Lithium

Assuming the 90 days horizon QMC Quantum Minerals is expected to generate 0.81 times more return on investment than American Lithium. However, QMC Quantum Minerals is 1.24 times less risky than American Lithium. It trades about 0.03 of its potential returns per unit of risk. American Lithium Corp is currently generating about -0.02 per unit of risk. If you would invest  5.50  in QMC Quantum Minerals on October 1, 2024 and sell it today you would earn a total of  0.00  from holding QMC Quantum Minerals 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

QMC Quantum Minerals  vs.  American Lithium Corp

QMC Quantum Minerals

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in QMC Quantum Minerals are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, QMC Quantum may actually be approaching a critical reversion point that can send shares even higher in January 2025.

American Lithium Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days American Lithium Corp 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 QMC Quantum and American Lithium

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

The idea behind QMC Quantum Minerals and American Lithium Corp 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 Stocks Directory module to find actively traded stocks across global markets.