Correlation Between Orezone Gold and Chatham Rock
Can any of the company-specific risk be diversified away by investing in both Orezone Gold and Chatham Rock 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 Chatham Rock 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 Chatham Rock Phosphate, you can compare the effects of market volatilities on Orezone Gold and Chatham Rock 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 Chatham Rock. Check out your portfolio center. Please also check ongoing floating volatility patterns of Orezone Gold and Chatham Rock.
Diversification Opportunities for Orezone Gold and Chatham Rock
0.19 | Correlation Coefficient |
Average diversification
The 3 months correlation between Orezone and Chatham is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Orezone Gold Corp and Chatham Rock Phosphate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chatham Rock Phosphate 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 Chatham Rock. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chatham Rock Phosphate has no effect on the direction of Orezone Gold i.e., Orezone Gold and Chatham Rock go up and down completely randomly.
Pair Corralation between Orezone Gold and Chatham Rock
Assuming the 90 days trading horizon Orezone Gold Corp is expected to under-perform the Chatham Rock. But the stock apears to be less risky and, when comparing its historical volatility, Orezone Gold Corp is 3.0 times less risky than Chatham Rock. The stock trades about -0.36 of its potential returns per unit of risk. The Chatham Rock Phosphate is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest 8.00 in Chatham Rock Phosphate on August 25, 2024 and sell it today you would lose (1.00) from holding Chatham Rock Phosphate or give up 12.5% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Orezone Gold Corp vs. Chatham Rock Phosphate
Performance |
| Timeline |
| Orezone Gold Corp |
| Chatham Rock Phosphate |
Orezone Gold and Chatham Rock Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Orezone Gold and Chatham Rock
The main advantage of trading using opposite Orezone Gold and Chatham Rock positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Orezone Gold position performs unexpectedly, Chatham Rock 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 Chatham Rock will offset losses from the drop in Chatham Rock'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 |
| Chatham Rock vs. First Majestic Silver | Chatham Rock vs. Ivanhoe Energy | Chatham Rock vs. Orezone Gold Corp | Chatham Rock vs. Faraday Copper Corp |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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