Correlation Between Gold Reserve and Ophir Gold

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

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

Diversification Opportunities for Gold Reserve and Ophir Gold

-0.84

Correlation Coefficient

Gold Reserve  Ophir Gold

Pay attention - limited upside

The 3 months correlation between Gold and Ophir is -0.84. Overlapping area represents the amount of risk that can be diversified away by holding Gold Reserve and Ophir Gold Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ophir Gold Corp and Gold Reserve 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 Gold Reserve are associated (or correlated) with Ophir Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ophir Gold Corp has no effect on the direction of Gold Reserve i.e., Gold Reserve and Ophir Gold go up and down completely randomly.

Pair Corralation between Gold Reserve and Ophir Gold

Assuming the 90 days horizon Gold Reserve is expected to generate 7.06 times less return on investment than Ophir Gold. But when comparing it to its historical volatility, Gold Reserve is 1.81 times less risky than Ophir Gold. It trades about 0.03 of its potential returns per unit of risk. Ophir Gold Corp is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  17.00  in Ophir Gold Corp on October 12, 2024 and sell it today you would earn a total of  22.00  from holding Ophir Gold Corp or generate 129.41% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	25.45%
Values	Daily Returns

Gold Reserve  vs.  Ophir Gold Corp

Gold Reserve

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Gold Reserve has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Ophir Gold Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ophir Gold Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable forward indicators, Ophir Gold is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Gold Reserve and Ophir Gold

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

The idea behind Gold Reserve and Ophir Gold Corp 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.