Correlation Between Marvel Gold and Orezone Gold

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

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

Diversification Opportunities for Marvel Gold and Orezone Gold

0.65

Correlation Coefficient

Marvel Gold  Orezone Gold

Poor diversification

The 3 months correlation between Marvel and Orezone is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Marvel Gold Limited and Orezone Gold Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Orezone Gold Corp and Marvel 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 Marvel Gold Limited are associated (or correlated) with Orezone Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Orezone Gold Corp has no effect on the direction of Marvel Gold i.e., Marvel Gold and Orezone Gold go up and down completely randomly.

Pair Corralation between Marvel Gold and Orezone Gold

Assuming the 90 days horizon Marvel Gold Limited is expected to under-perform the Orezone Gold. In addition to that, Marvel Gold is 2.59 times more volatile than Orezone Gold Corp. It trades about -0.13 of its total potential returns per unit of risk. Orezone Gold Corp is currently generating about -0.03 per unit of volatility. If you would invest  51.00  in Orezone Gold Corp on August 31, 2024 and sell it today you would lose (6.00) from holding Orezone Gold Corp or give up 11.76% of portfolio value over 90 days.

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

Marvel Gold Limited  vs.  Orezone Gold Corp

Marvel Gold Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Marvel Gold Limited 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 primary indicators remain nearly stable which may send shares a bit higher in December 2024. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Orezone Gold Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Orezone Gold Corp 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 Marvel Gold and Orezone Gold

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

The idea behind Marvel Gold Limited and Orezone 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.