Correlation Between Qubec Nickel and Cascadero Copper

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

Diversification Opportunities for Qubec Nickel and Cascadero Copper

0.39

Correlation Coefficient

Qubec Nickel  Cascadero Copper

Weak diversification

The 3 months correlation between Qubec and Cascadero is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Qubec Nickel Corp and Cascadero Copper in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cascadero Copper and Qubec 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 Cascadero Copper. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cascadero Copper has no effect on the direction of Qubec Nickel i.e., Qubec Nickel and Cascadero Copper go up and down completely randomly.

Pair Corralation between Qubec Nickel and Cascadero Copper

Assuming the 90 days horizon Qubec Nickel is expected to generate 8.31 times less return on investment than Cascadero Copper. But when comparing it to its historical volatility, Qubec Nickel Corp is 2.24 times less risky than Cascadero Copper. It trades about 0.04 of its potential returns per unit of risk. Cascadero Copper is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  1.50  in Cascadero Copper on September 14, 2024 and sell it today you would lose (0.75) from holding Cascadero Copper or give up 50.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	99.8%
Values	Daily Returns

Qubec Nickel Corp  vs.  Cascadero Copper

Qubec Nickel Corp

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Qubec Nickel Corp are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak fundamental indicators, Qubec Nickel reported solid returns over the last few months and may actually be approaching a breakup point.

Cascadero Copper

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Cascadero Copper are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile fundamental indicators, Cascadero Copper reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Qubec Nickel and Cascadero Copper

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

The idea behind Qubec Nickel Corp and Cascadero Copper 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 Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.