Correlation Between Fremont Gold and Orogen Royalties

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

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

Diversification Opportunities for Fremont Gold and Orogen Royalties

-0.12

Correlation Coefficient

Fremont Gold  Orogen Royalties

Good diversification

The 3 months correlation between Fremont and Orogen is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Fremont Gold and Orogen Royalties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Orogen Royalties and Fremont 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 Fremont Gold are associated (or correlated) with Orogen Royalties. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Orogen Royalties has no effect on the direction of Fremont Gold i.e., Fremont Gold and Orogen Royalties go up and down completely randomly.

Pair Corralation between Fremont Gold and Orogen Royalties

Assuming the 90 days horizon Fremont Gold is expected to generate 7.97 times more return on investment than Orogen Royalties. However, Fremont Gold is 7.97 times more volatile than Orogen Royalties. It trades about 0.28 of its potential returns per unit of risk. Orogen Royalties is currently generating about 0.15 per unit of risk. If you would invest  4.80  in Fremont Gold on December 29, 2024 and sell it today you would earn a total of  4.50  from holding Fremont Gold or generate 93.75% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	32.79%
Values	Daily Returns

Fremont Gold  vs.  Orogen Royalties

Fremont Gold

Risk-Adjusted Performance

Solid

Over the last 90 days Fremont Gold has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly fragile basic indicators, Fremont Gold reported solid returns over the last few months and may actually be approaching a breakup point.

Orogen Royalties

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Orogen Royalties are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Orogen Royalties reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Fremont Gold and Orogen Royalties

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

The idea behind Fremont Gold and Orogen Royalties 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 CEOs Directory module to screen CEOs from public companies around the world.