Correlation Between Teck Resources and Québec Nickel

Can any of the company-specific risk be diversified away by investing in both Teck Resources 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 Teck Resources and Québec Nickel into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Teck Resources Ltd and Qubec Nickel Corp, you can compare the effects of market volatilities on Teck Resources 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 Teck Resources with a short position of Québec Nickel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Teck Resources and Québec Nickel.

Diversification Opportunities for Teck Resources and Québec Nickel

0.68

Correlation Coefficient

Teck Resources  Québec Nickel

Poor diversification

The 1 month correlation between Teck and Québec is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Teck Resources Ltd 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 Teck Resources 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 Teck Resources Ltd 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 Teck Resources i.e., Teck Resources and Québec Nickel go up and down completely randomly.

Pair Corralation between Teck Resources and Québec Nickel

Given the investment horizon of 90 days Teck Resources is expected to generate 8.39 times less return on investment than Québec Nickel. But when comparing it to its historical volatility, Teck Resources Ltd is 2.78 times less risky than Québec Nickel. It trades about 0.06 of its potential returns per unit of risk. Qubec Nickel Corp is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  6.93  in Qubec Nickel Corp on March 15, 2024 and sell it today you would earn a total of  4.07  from holding Qubec Nickel Corp or generate 58.73% return on investment over 90 days.

Time Period	1 Month [change]
Direction	Moves Together
Strength	Significant
Accuracy	79.03%
Values	Daily Returns

Teck Resources Ltd  vs.  Qubec Nickel Corp

Teck Resources

Risk-Adjusted Performance

0 of 100

Insignificant

Over the last 90 days Teck Resources Ltd has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's fundamental indicators remain quite persistent which may send shares a bit higher in July 2024. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Qubec Nickel Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Qubec Nickel Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's fundamental indicators remain nearly stable which may send shares a bit higher in July 2024. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Teck Resources and Québec Nickel

The main advantage of trading using opposite Teck Resources and Québec Nickel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Teck Resources 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.

The idea behind Teck Resources Ltd and Qubec Nickel Corp 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.