Correlation Between Lundin Gold and Ophir Gold

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

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

Diversification Opportunities for Lundin Gold and Ophir Gold

-0.63

Correlation Coefficient

Lundin Gold  Ophir Gold

Excellent diversification

The 3 months correlation between Lundin and Ophir is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Lundin Gold 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 Lundin 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 Lundin Gold 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 Lundin Gold i.e., Lundin Gold and Ophir Gold go up and down completely randomly.

Pair Corralation between Lundin Gold and Ophir Gold

Assuming the 90 days horizon Lundin Gold is expected to generate 5.75 times less return on investment than Ophir Gold. But when comparing it to its historical volatility, Lundin Gold is 3.47 times less risky than Ophir Gold. It trades about 0.07 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	Weak
Accuracy	25.45%
Values	Daily Returns

Lundin Gold  vs.  Ophir Gold Corp

Lundin Gold

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lundin Gold 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.

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 Lundin Gold and Ophir Gold

The main advantage of trading using opposite Lundin Gold and Ophir Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lundin Gold 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 Lundin Gold 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.