Correlation Between Quartz Mountain and Blue Star

Can any of the company-specific risk be diversified away by investing in both Quartz Mountain and Blue Star 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 Quartz Mountain and Blue Star into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Quartz Mountain Resources and Blue Star Gold, you can compare the effects of market volatilities on Quartz Mountain and Blue Star 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 Quartz Mountain with a short position of Blue Star. Check out your portfolio center. Please also check ongoing floating volatility patterns of Quartz Mountain and Blue Star.

Diversification Opportunities for Quartz Mountain and Blue Star

-0.08

Correlation Coefficient

Quartz Mountain  Blue Star

Good diversification

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

Pair Corralation between Quartz Mountain and Blue Star

Assuming the 90 days horizon Quartz Mountain Resources is expected to generate 1.43 times more return on investment than Blue Star. However, Quartz Mountain is 1.43 times more volatile than Blue Star Gold. It trades about 0.17 of its potential returns per unit of risk. Blue Star Gold is currently generating about -0.11 per unit of risk. If you would invest  39.00  in Quartz Mountain Resources on September 23, 2024 and sell it today you would earn a total of  7.00  from holding Quartz Mountain Resources or generate 17.95% return on investment over 90 days.

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

Quartz Mountain Resources  vs.  Blue Star Gold

Quartz Mountain Resources

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Quartz Mountain Resources has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Quartz Mountain is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Blue Star Gold

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Blue Star Gold are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Blue Star may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Quartz Mountain and Blue Star

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

The idea behind Quartz Mountain Resources and Blue Star 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.