Correlation Between Flinders Resources and Orla Mining

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

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

Diversification Opportunities for Flinders Resources and Orla Mining

0.19

Correlation Coefficient

Flinders Resources  Orla Mining

Average diversification

The 3 months correlation between Flinders and Orla is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Flinders Resources Limited and Orla Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Orla Mining and Flinders Resources 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 Flinders Resources Limited are associated (or correlated) with Orla Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Orla Mining has no effect on the direction of Flinders Resources i.e., Flinders Resources and Orla Mining go up and down completely randomly.

Pair Corralation between Flinders Resources and Orla Mining

Assuming the 90 days horizon Flinders Resources Limited is expected to generate 2.48 times more return on investment than Orla Mining. However, Flinders Resources is 2.48 times more volatile than Orla Mining. It trades about 0.13 of its potential returns per unit of risk. Orla Mining is currently generating about 0.05 per unit of risk. If you would invest  20.00  in Flinders Resources Limited on October 11, 2024 and sell it today you would earn a total of  569.00  from holding Flinders Resources Limited or generate 2845.0% return on investment over 90 days.

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

Flinders Resources Limited  vs.  Orla Mining

Flinders Resources

Risk-Adjusted Performance

23 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Flinders Resources Limited are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Flinders Resources showed solid returns over the last few months and may actually be approaching a breakup point.

Orla Mining

Risk-Adjusted Performance

13 of 100

Good

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

Pair Trading with Flinders Resources and Orla Mining

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

The idea behind Flinders Resources Limited and Orla Mining 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.

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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.