Correlation Between Orogen Royalties and Norsemont Mining

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

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

Diversification Opportunities for Orogen Royalties and Norsemont Mining

0.13

Correlation Coefficient

Orogen Royalties  Norsemont Mining

Average diversification

The 3 months correlation between Orogen and Norsemont is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Orogen Royalties and Norsemont Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Norsemont Mining and Orogen Royalties 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 Orogen Royalties are associated (or correlated) with Norsemont Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Norsemont Mining has no effect on the direction of Orogen Royalties i.e., Orogen Royalties and Norsemont Mining go up and down completely randomly.

Pair Corralation between Orogen Royalties and Norsemont Mining

Assuming the 90 days horizon Orogen Royalties is expected to generate 2.63 times less return on investment than Norsemont Mining. But when comparing it to its historical volatility, Orogen Royalties is 4.13 times less risky than Norsemont Mining. It trades about 0.15 of its potential returns per unit of risk. Norsemont Mining is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  13.00  in Norsemont Mining on December 30, 2024 and sell it today you would earn a total of  4.00  from holding Norsemont Mining or generate 30.77% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

Orogen Royalties  vs.  Norsemont Mining

Orogen Royalties

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Orogen Royalties are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Orogen Royalties reported solid returns over the last few months and may actually be approaching a breakup point.

Norsemont Mining

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Norsemont Mining are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Norsemont Mining reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Orogen Royalties and Norsemont Mining

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

The idea behind Orogen Royalties and Norsemont Mining 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.