Correlation Between Orezone Gold and Outcrop Gold
Can any of the company-specific risk be diversified away by investing in both Orezone Gold and Outcrop Gold 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 Outcrop Gold 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 Outcrop Gold Corp, you can compare the effects of market volatilities on Orezone Gold and Outcrop Gold 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 Outcrop Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Orezone Gold and Outcrop Gold.
Diversification Opportunities for Orezone Gold and Outcrop Gold
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Orezone and Outcrop is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Orezone Gold Corp and Outcrop Gold Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Outcrop Gold Corp 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 Outcrop Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Outcrop Gold Corp has no effect on the direction of Orezone Gold i.e., Orezone Gold and Outcrop Gold go up and down completely randomly.
Pair Corralation between Orezone Gold and Outcrop Gold
Assuming the 90 days trading horizon Orezone Gold Corp is expected to under-perform the Outcrop Gold. But the stock apears to be less risky and, when comparing its historical volatility, Orezone Gold Corp is 1.68 times less risky than Outcrop Gold. The stock trades about -0.05 of its potential returns per unit of risk. The Outcrop Gold Corp is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 24.00 in Outcrop Gold Corp on August 29, 2024 and sell it today you would lose (2.00) from holding Outcrop Gold Corp or give up 8.33% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Orezone Gold Corp vs. Outcrop Gold Corp
Performance |
| Timeline |
| Orezone Gold Corp |
| Outcrop Gold Corp |
Orezone Gold and Outcrop Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Orezone Gold and Outcrop Gold
The main advantage of trading using opposite Orezone Gold and Outcrop Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Orezone Gold position performs unexpectedly, Outcrop Gold 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 Outcrop Gold will offset losses from the drop in Outcrop Gold's long position.The idea behind Orezone Gold Corp and Outcrop Gold 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.| Outcrop Gold vs. Strikepoint Gold | Outcrop Gold vs. Kootenay Silver | Outcrop Gold vs. Kore Mining | Outcrop Gold vs. Blackrock Silver 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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