Correlation Between Ophir Gold and Lupaka Gold

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

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

Diversification Opportunities for Ophir Gold and Lupaka Gold

0.31

Correlation Coefficient

Ophir Gold  Lupaka Gold

Weak diversification

The 3 months correlation between Ophir and Lupaka is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Ophir Gold Corp and Lupaka Gold Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lupaka Gold Corp and Ophir 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 Ophir Gold Corp are associated (or correlated) with Lupaka Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lupaka Gold Corp has no effect on the direction of Ophir Gold i.e., Ophir Gold and Lupaka Gold go up and down completely randomly.

Pair Corralation between Ophir Gold and Lupaka Gold

Assuming the 90 days horizon Ophir Gold is expected to generate 4.56 times less return on investment than Lupaka Gold. But when comparing it to its historical volatility, Ophir Gold Corp is 6.93 times less risky than Lupaka Gold. It trades about 0.12 of its potential returns per unit of risk. Lupaka Gold Corp is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  3.00  in Lupaka Gold Corp on October 12, 2024 and sell it today you would lose (0.17) from holding Lupaka Gold Corp or give up 5.67% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	28.64%
Values	Daily Returns

Ophir Gold Corp  vs.  Lupaka Gold Corp

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.

Lupaka Gold Corp

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Ophir Gold and Lupaka Gold

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

The idea behind Ophir Gold Corp and Lupaka 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.