Correlation Between Contango ORE and Dynacor Gold

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

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

Diversification Opportunities for Contango ORE and Dynacor Gold

0.67

Correlation Coefficient

Contango ORE  Dynacor Gold

Poor diversification

The 3 months correlation between Contango and Dynacor is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Contango ORE and Dynacor Gold Mines in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dynacor Gold Mines and Contango ORE 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 Contango ORE are associated (or correlated) with Dynacor Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dynacor Gold Mines has no effect on the direction of Contango ORE i.e., Contango ORE and Dynacor Gold go up and down completely randomly.

Pair Corralation between Contango ORE and Dynacor Gold

Given the investment horizon of 90 days Contango ORE is expected to generate 1.74 times more return on investment than Dynacor Gold. However, Contango ORE is 1.74 times more volatile than Dynacor Gold Mines. It trades about 0.02 of its potential returns per unit of risk. Dynacor Gold Mines is currently generating about -0.08 per unit of risk. If you would invest  1,010  in Contango ORE on December 30, 2024 and sell it today you would lose (2.00) from holding Contango ORE or give up 0.2% of portfolio value over 90 days.

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

Contango ORE  vs.  Dynacor Gold Mines

Contango ORE

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Contango ORE are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy technical and fundamental indicators, Contango ORE is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Dynacor Gold Mines

Risk-Adjusted Performance

Very Weak

Over the last 90 days Dynacor Gold Mines has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Contango ORE and Dynacor Gold

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

The idea behind Contango ORE and Dynacor Gold Mines 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.