Correlation Between Almaden Minerals and Orex Minerals

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

By analyzing existing cross correlation between Almaden Minerals and Orex Minerals, you can compare the effects of market volatilities on Almaden Minerals and Orex Minerals 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 Almaden Minerals with a short position of Orex Minerals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Almaden Minerals and Orex Minerals.

Diversification Opportunities for Almaden Minerals and Orex Minerals

0.44

Correlation Coefficient

Almaden Minerals  Orex Minerals

Very weak diversification

The 3 months correlation between Almaden and Orex is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Almaden Minerals and Orex Minerals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Orex Minerals and Almaden Minerals 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 Almaden Minerals are associated (or correlated) with Orex Minerals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Orex Minerals has no effect on the direction of Almaden Minerals i.e., Almaden Minerals and Orex Minerals go up and down completely randomly.

Pair Corralation between Almaden Minerals and Orex Minerals

Assuming the 90 days trading horizon Almaden Minerals is expected to generate 1.35 times more return on investment than Orex Minerals. However, Almaden Minerals is 1.35 times more volatile than Orex Minerals. It trades about 0.17 of its potential returns per unit of risk. Orex Minerals is currently generating about 0.08 per unit of risk. If you would invest  6.00  in Almaden Minerals on December 26, 2024 and sell it today you would earn a total of  6.00  from holding Almaden Minerals or generate 100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.39%
Values	Daily Returns

Almaden Minerals  vs.  Orex Minerals

Almaden Minerals

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Almaden Minerals are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of very abnormal primary indicators, Almaden Minerals displayed solid returns over the last few months and may actually be approaching a breakup point.

Orex Minerals

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Orex Minerals are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Orex Minerals showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Almaden Minerals and Orex Minerals

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

The idea behind Almaden Minerals and Orex Minerals 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.