Correlation Between Infinico Metals and OceanaGold

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

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

Diversification Opportunities for Infinico Metals and OceanaGold

0.18

Correlation Coefficient

Infinico Metals  OceanaGold

Average diversification

The 3 months correlation between Infinico and OceanaGold is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Infinico Metals Corp and OceanaGold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OceanaGold and Infinico Metals 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 Infinico Metals Corp are associated (or correlated) with OceanaGold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OceanaGold has no effect on the direction of Infinico Metals i.e., Infinico Metals and OceanaGold go up and down completely randomly.

Pair Corralation between Infinico Metals and OceanaGold

Assuming the 90 days trading horizon Infinico Metals Corp is expected to generate 7.3 times more return on investment than OceanaGold. However, Infinico Metals is 7.3 times more volatile than OceanaGold. It trades about 0.04 of its potential returns per unit of risk. OceanaGold is currently generating about -0.06 per unit of risk. If you would invest  2.50  in Infinico Metals Corp on November 29, 2024 and sell it today you would lose (1.00) from holding Infinico Metals Corp or give up 40.0% of portfolio value over 90 days.

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

Infinico Metals Corp  vs.  OceanaGold

Infinico Metals Corp

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Infinico Metals Corp are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating technical and fundamental indicators, Infinico Metals showed solid returns over the last few months and may actually be approaching a breakup point.

OceanaGold

Risk-Adjusted Performance

Very Weak

Over the last 90 days OceanaGold has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's fundamental indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Infinico Metals and OceanaGold

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

The idea behind Infinico Metals Corp and OceanaGold 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.