Correlation Between Eldorado Gold and Ocean Biomedical

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

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

Diversification Opportunities for Eldorado Gold and Ocean Biomedical

0.39

Correlation Coefficient

Eldorado Gold  Ocean Biomedical

Weak diversification

The 3 months correlation between Eldorado and Ocean is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Eldorado Gold Corp and Ocean Biomedical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ocean Biomedical and Eldorado 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 Eldorado Gold Corp are associated (or correlated) with Ocean Biomedical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ocean Biomedical has no effect on the direction of Eldorado Gold i.e., Eldorado Gold and Ocean Biomedical go up and down completely randomly.

Pair Corralation between Eldorado Gold and Ocean Biomedical

Considering the 90-day investment horizon Eldorado Gold Corp is expected to under-perform the Ocean Biomedical. But the stock apears to be less risky and, when comparing its historical volatility, Eldorado Gold Corp is 9.23 times less risky than Ocean Biomedical. The stock trades about 0.0 of its potential returns per unit of risk. The Ocean Biomedical is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  4.00  in Ocean Biomedical on October 8, 2024 and sell it today you would lose (1.45) from holding Ocean Biomedical or give up 36.25% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	94.4%
Values	Daily Returns

Eldorado Gold Corp  vs.  Ocean Biomedical

Eldorado Gold Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Eldorado Gold Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy technical and fundamental indicators, Eldorado Gold is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Ocean Biomedical

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ocean Biomedical has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly unsteady basic indicators, Ocean Biomedical may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Eldorado Gold and Ocean Biomedical

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

The idea behind Eldorado Gold Corp and Ocean Biomedical 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.