Correlation Between Omineca Mining and Cabral Gold

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

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

Diversification Opportunities for Omineca Mining and Cabral Gold

0.17

Correlation Coefficient

Omineca Mining  Cabral Gold

Average diversification

The 3 months correlation between Omineca and Cabral is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Omineca Mining and and Cabral Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cabral Gold and Omineca Mining 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 Omineca Mining and are associated (or correlated) with Cabral Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cabral Gold has no effect on the direction of Omineca Mining i.e., Omineca Mining and Cabral Gold go up and down completely randomly.

Pair Corralation between Omineca Mining and Cabral Gold

Assuming the 90 days horizon Omineca Mining is expected to generate 1.83 times less return on investment than Cabral Gold. In addition to that, Omineca Mining is 1.17 times more volatile than Cabral Gold. It trades about 0.03 of its total potential returns per unit of risk. Cabral Gold is currently generating about 0.06 per unit of volatility. If you would invest  10.00  in Cabral Gold on September 1, 2024 and sell it today you would earn a total of  8.00  from holding Cabral Gold or generate 80.0% return on investment over 90 days.

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

Omineca Mining and  vs.  Cabral Gold

Omineca Mining

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Omineca Mining and has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in December 2024. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Cabral Gold

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cabral Gold has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Omineca Mining and Cabral Gold

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

The idea behind Omineca Mining and and Cabral Gold 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.