Correlation Between Québec Nickel and Lithium Australia
Can any of the company-specific risk be diversified away by investing in both Québec Nickel and Lithium Australia 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 Lithium Australia 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 Lithium Australia NL, you can compare the effects of market volatilities on Québec Nickel and Lithium Australia 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 Lithium Australia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Québec Nickel and Lithium Australia.
Diversification Opportunities for Québec Nickel and Lithium Australia
-0.01 | Correlation Coefficient |
Good diversification
The 3 months correlation between Québec and Lithium is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Qubec Nickel Corp and Lithium Australia NL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lithium Australia 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 Lithium Australia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lithium Australia has no effect on the direction of Québec Nickel i.e., Québec Nickel and Lithium Australia go up and down completely randomly.
Pair Corralation between Québec Nickel and Lithium Australia
Assuming the 90 days horizon Québec Nickel is expected to generate 26.75 times less return on investment than Lithium Australia. But when comparing it to its historical volatility, Qubec Nickel Corp is 7.92 times less risky than Lithium Australia. It trades about 0.02 of its potential returns per unit of risk. Lithium Australia NL is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 1.70 in Lithium Australia NL on September 3, 2024 and sell it today you would lose (1.00) from holding Lithium Australia NL or give up 58.82% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.4% |
| Values | Daily Returns |
Qubec Nickel Corp vs. Lithium Australia NL
Performance |
| Timeline |
| Qubec Nickel Corp |
| Lithium Australia |
Québec Nickel and Lithium Australia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Québec Nickel and Lithium Australia
The main advantage of trading using opposite Québec Nickel and Lithium Australia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Québec Nickel position performs unexpectedly, Lithium Australia 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 Lithium Australia will offset losses from the drop in Lithium Australia's long position.| Québec Nickel vs. Norra Metals Corp | Québec Nickel vs. E79 Resources Corp | Québec Nickel vs. Voltage Metals Corp | Québec Nickel vs. Cantex Mine Development |
| Lithium Australia vs. Grid Metals Corp | Lithium Australia vs. Latin Metals | Lithium Australia vs. First American Silver | Lithium Australia vs. IGO Limited |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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