Correlation Between Ora Banda and Catalyst Metals

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

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

Diversification Opportunities for Ora Banda and Catalyst Metals

0.81

Correlation Coefficient

Ora Banda  Catalyst Metals

Very poor diversification

The 3 months correlation between Ora and Catalyst is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Ora Banda Mining and Catalyst Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Catalyst Metals and Ora Banda 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 Ora Banda Mining are associated (or correlated) with Catalyst Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Catalyst Metals has no effect on the direction of Ora Banda i.e., Ora Banda and Catalyst Metals go up and down completely randomly.

Pair Corralation between Ora Banda and Catalyst Metals

Assuming the 90 days trading horizon Ora Banda Mining is expected to generate 0.72 times more return on investment than Catalyst Metals. However, Ora Banda Mining is 1.39 times less risky than Catalyst Metals. It trades about -0.14 of its potential returns per unit of risk. Catalyst Metals is currently generating about -0.13 per unit of risk. If you would invest  75.00  in Ora Banda Mining on September 22, 2024 and sell it today you would lose (10.00) from holding Ora Banda Mining or give up 13.33% of portfolio value over 90 days.

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

Ora Banda Mining  vs.  Catalyst Metals

Ora Banda Mining

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ora Banda Mining has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable primary indicators, Ora Banda is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Catalyst Metals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Catalyst Metals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable essential indicators, Catalyst Metals is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Ora Banda and Catalyst Metals

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

The idea behind Ora Banda Mining and Catalyst Metals 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.