Correlation Between First Majestic and Orezone Gold

Can any of the company-specific risk be diversified away by investing in both First Majestic and Orezone 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 First Majestic and Orezone Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between First Majestic Silver and Orezone Gold Corp, you can compare the effects of market volatilities on First Majestic and Orezone 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 First Majestic with a short position of Orezone Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Majestic and Orezone Gold.

Diversification Opportunities for First Majestic and Orezone Gold

0.31

Correlation Coefficient

First Majestic  Orezone Gold

Weak diversification

The 3 months correlation between First and Orezone is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding First Majestic Silver and Orezone Gold Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Orezone Gold Corp and First Majestic 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 First Majestic Silver are associated (or correlated) with Orezone Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Orezone Gold Corp has no effect on the direction of First Majestic i.e., First Majestic and Orezone Gold go up and down completely randomly.

Pair Corralation between First Majestic and Orezone Gold

Assuming the 90 days horizon First Majestic Silver is expected to generate 1.0 times more return on investment than Orezone Gold. However, First Majestic Silver is 1.0 times less risky than Orezone Gold. It trades about 0.0 of its potential returns per unit of risk. Orezone Gold Corp is currently generating about -0.02 per unit of risk. If you would invest  1,208  in First Majestic Silver on August 30, 2024 and sell it today you would lose (347.00) from holding First Majestic Silver or give up 28.73% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

First Majestic Silver  vs.  Orezone Gold Corp

First Majestic Silver

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in First Majestic Silver are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, First Majestic displayed solid returns over the last few months and may actually be approaching a breakup point.

Orezone Gold Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Orezone Gold Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's technical and fundamental indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with First Majestic and Orezone Gold

The main advantage of trading using opposite First Majestic and Orezone Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Majestic position performs unexpectedly, Orezone 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 Orezone Gold will offset losses from the drop in Orezone Gold's long position.

The idea behind First Majestic Silver and Orezone 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.

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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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.