Correlation Between Orezone Gold and Aston Bay

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

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

Diversification Opportunities for Orezone Gold and Aston Bay

-0.6

Correlation Coefficient

Orezone Gold  Aston Bay

Excellent diversification

The 3 months correlation between Orezone and Aston is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Orezone Gold Corp and Aston Bay Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aston Bay Holdings and Orezone 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 Orezone Gold Corp are associated (or correlated) with Aston Bay. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aston Bay Holdings has no effect on the direction of Orezone Gold i.e., Orezone Gold and Aston Bay go up and down completely randomly.

Pair Corralation between Orezone Gold and Aston Bay

Assuming the 90 days trading horizon Orezone Gold Corp is expected to generate 0.6 times more return on investment than Aston Bay. However, Orezone Gold Corp is 1.67 times less risky than Aston Bay. It trades about 0.22 of its potential returns per unit of risk. Aston Bay Holdings is currently generating about 0.01 per unit of risk. If you would invest  63.00  in Orezone Gold Corp on December 28, 2024 and sell it today you would earn a total of  37.00  from holding Orezone Gold Corp or generate 58.73% return on investment over 90 days.

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

Orezone Gold Corp  vs.  Aston Bay Holdings

Orezone Gold Corp

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Orezone Gold Corp are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating technical and fundamental indicators, Orezone Gold displayed solid returns over the last few months and may actually be approaching a breakup point.

Aston Bay Holdings

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Orezone Gold and Aston Bay

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

The idea behind Orezone Gold Corp and Aston Bay Holdings 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.