Correlation Between Québec Nickel and BCM Resources

Can any of the company-specific risk be diversified away by investing in both Québec Nickel and BCM 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 Québec Nickel and BCM Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Qubec Nickel Corp and BCM Resources, you can compare the effects of market volatilities on Québec Nickel and BCM 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 Québec Nickel with a short position of BCM Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Québec Nickel and BCM Resources.

Diversification Opportunities for Québec Nickel and BCM Resources

-0.26

Correlation Coefficient

Québec Nickel  BCM Resources

Very good diversification

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

Pair Corralation between Québec Nickel and BCM Resources

Assuming the 90 days horizon Qubec Nickel Corp is expected to under-perform the BCM Resources. In addition to that, Québec Nickel is 1.18 times more volatile than BCM Resources. It trades about -0.01 of its total potential returns per unit of risk. BCM Resources is currently generating about 0.04 per unit of volatility. If you would invest  4.00  in BCM Resources on September 3, 2024 and sell it today you would lose (0.47) from holding BCM Resources or give up 11.75% of portfolio value over 90 days.

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

Qubec Nickel Corp  vs.  BCM Resources

Qubec Nickel Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Qubec Nickel Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

BCM Resources

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in BCM Resources are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, BCM Resources reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Québec Nickel and BCM Resources

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

The idea behind Qubec Nickel Corp and BCM 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.

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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.