Correlation Between Orezone Gold and Lion One
Can any of the company-specific risk be diversified away by investing in both Orezone Gold and Lion One 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 Orezone Gold and Lion One into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Orezone Gold Corp and Lion One Metals, you can compare the effects of market volatilities on Orezone Gold and Lion One 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 Orezone Gold with a short position of Lion One. Check out your portfolio center. Please also check ongoing floating volatility patterns of Orezone Gold and Lion One.
Diversification Opportunities for Orezone Gold and Lion One
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Orezone and Lion is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Orezone Gold Corp and Lion One Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lion One Metals and Orezone Gold 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 Orezone Gold Corp are associated (or correlated) with Lion One. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lion One Metals has no effect on the direction of Orezone Gold i.e., Orezone Gold and Lion One go up and down completely randomly.
Pair Corralation between Orezone Gold and Lion One
Assuming the 90 days trading horizon Orezone Gold Corp is expected to under-perform the Lion One. In addition to that, Orezone Gold is 1.22 times more volatile than Lion One Metals. It trades about -0.05 of its total potential returns per unit of risk. Lion One Metals is currently generating about -0.02 per unit of volatility. If you would invest 31.00 in Lion One Metals on August 26, 2024 and sell it today you would lose (2.00) from holding Lion One Metals or give up 6.45% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Orezone Gold Corp vs. Lion One Metals
Performance |
| Timeline |
| Orezone Gold Corp |
| Lion One Metals |
Orezone Gold and Lion One Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Orezone Gold and Lion One
The main advantage of trading using opposite Orezone Gold and Lion One positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Orezone Gold position performs unexpectedly, Lion One 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 Lion One will offset losses from the drop in Lion One's long position.| Orezone Gold vs. i 80 Gold Corp | Orezone Gold vs. Perseus Mining | Orezone Gold vs. K92 Mining | Orezone Gold vs. GoGold Resources |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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