Correlation Between Qubec Nickel and Nova Minerals

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

Diversification Opportunities for Qubec Nickel and Nova Minerals

-0.08

Correlation Coefficient

Qubec Nickel  Nova Minerals

Good diversification

The 3 months correlation between Qubec and Nova is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Qubec Nickel Corp and Nova Minerals Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nova Minerals Limited 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 Nova Minerals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nova Minerals Limited has no effect on the direction of Qubec Nickel i.e., Qubec Nickel and Nova Minerals go up and down completely randomly.

Pair Corralation between Qubec Nickel and Nova Minerals

Assuming the 90 days horizon Qubec Nickel is expected to generate 6.25 times less return on investment than Nova Minerals. But when comparing it to its historical volatility, Qubec Nickel Corp is 2.51 times less risky than Nova Minerals. It trades about 0.04 of its potential returns per unit of risk. Nova Minerals Limited is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  45.00  in Nova Minerals Limited on September 12, 2024 and sell it today you would lose (25.00) from holding Nova Minerals Limited or give up 55.56% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.8%
Values	Daily Returns

Qubec Nickel Corp  vs.  Nova Minerals Limited

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.

Nova Minerals Limited

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Nova Minerals Limited are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Nova Minerals reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Qubec Nickel and Nova Minerals

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

The idea behind Qubec Nickel Corp and Nova Minerals Limited 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.