Correlation Between Olympia Financial and NeXGold Mining

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

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

Diversification Opportunities for Olympia Financial and NeXGold Mining

-0.04

Correlation Coefficient

Olympia Financial  NeXGold Mining

Good diversification

The 3 months correlation between Olympia and NeXGold is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Olympia Financial Group and NeXGold Mining Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NeXGold Mining Corp and Olympia Financial 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 Olympia Financial Group are associated (or correlated) with NeXGold Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NeXGold Mining Corp has no effect on the direction of Olympia Financial i.e., Olympia Financial and NeXGold Mining go up and down completely randomly.

Pair Corralation between Olympia Financial and NeXGold Mining

Assuming the 90 days trading horizon Olympia Financial Group is expected to under-perform the NeXGold Mining. But the stock apears to be less risky and, when comparing its historical volatility, Olympia Financial Group is 2.57 times less risky than NeXGold Mining. The stock trades about -0.02 of its potential returns per unit of risk. The NeXGold Mining Corp is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  67.00  in NeXGold Mining Corp on December 30, 2024 and sell it today you would lose (1.00) from holding NeXGold Mining Corp or give up 1.49% of portfolio value over 90 days.

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

Olympia Financial Group  vs.  NeXGold Mining Corp

Olympia Financial

Risk-Adjusted Performance

Very Weak

Over the last 90 days Olympia Financial Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Olympia Financial is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

NeXGold Mining Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days NeXGold Mining Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, NeXGold Mining is not utilizing all of its potentials. The recent stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Olympia Financial and NeXGold Mining

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

The idea behind Olympia Financial Group and NeXGold Mining 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..