Correlation Between Australian Mines and Québec Nickel
Can any of the company-specific risk be diversified away by investing in both Australian Mines and Québec Nickel 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 Australian Mines and Québec Nickel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Australian Mines Limited and Qubec Nickel Corp, you can compare the effects of market volatilities on Australian Mines and Québec Nickel 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 Australian Mines with a short position of Québec Nickel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Australian Mines and Québec Nickel.
Diversification Opportunities for Australian Mines and Québec Nickel
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Australian and Québec is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Australian Mines Limited and Qubec Nickel Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Qubec Nickel Corp and Australian Mines 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 Australian Mines Limited are associated (or correlated) with Québec Nickel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Qubec Nickel Corp has no effect on the direction of Australian Mines i.e., Australian Mines and Québec Nickel go up and down completely randomly.
Pair Corralation between Australian Mines and Québec Nickel
Assuming the 90 days horizon Australian Mines Limited is expected to generate 6.92 times more return on investment than Québec Nickel. However, Australian Mines is 6.92 times more volatile than Qubec Nickel Corp. It trades about 0.14 of its potential returns per unit of risk. Qubec Nickel Corp is currently generating about 0.01 per unit of risk. If you would invest 0.51 in Australian Mines Limited on September 4, 2024 and sell it today you would earn a total of 0.40 from holding Australian Mines Limited or generate 78.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 69.23% |
| Values | Daily Returns |
Australian Mines Limited vs. Qubec Nickel Corp
Performance |
| Timeline |
| Australian Mines |
| Qubec Nickel Corp |
Australian Mines and Québec Nickel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Australian Mines and Québec Nickel
The main advantage of trading using opposite Australian Mines and Québec Nickel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Australian Mines position performs unexpectedly, Québec Nickel 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 Québec Nickel will offset losses from the drop in Québec Nickel's long position.| Australian Mines vs. Qubec Nickel Corp | Australian Mines vs. IGO Limited | Australian Mines vs. Avarone Metals | Australian Mines vs. Adriatic Metals PLC |
| Québec Nickel vs. Norra Metals Corp | Québec Nickel vs. E79 Resources Corp | Québec Nickel vs. Voltage Metals Corp | Québec Nickel vs. Cantex Mine Development |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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