Correlation Between Orezone Gold and Sailfish Royalty

Can any of the company-specific risk be diversified away by investing in both Orezone Gold and Sailfish Royalty 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 Sailfish Royalty 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 Sailfish Royalty Corp, you can compare the effects of market volatilities on Orezone Gold and Sailfish Royalty 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 Sailfish Royalty. Check out your portfolio center. Please also check ongoing floating volatility patterns of Orezone Gold and Sailfish Royalty.

Diversification Opportunities for Orezone Gold and Sailfish Royalty

0.23

Correlation Coefficient

Orezone Gold  Sailfish Royalty

Modest diversification

The 3 months correlation between Orezone and Sailfish is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Orezone Gold Corp and Sailfish Royalty Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sailfish Royalty Corp 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 Sailfish Royalty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sailfish Royalty Corp has no effect on the direction of Orezone Gold i.e., Orezone Gold and Sailfish Royalty go up and down completely randomly.

Pair Corralation between Orezone Gold and Sailfish Royalty

Assuming the 90 days trading horizon Orezone Gold Corp is expected to generate 1.43 times more return on investment than Sailfish Royalty. However, Orezone Gold is 1.43 times more volatile than Sailfish Royalty Corp. It trades about -0.02 of its potential returns per unit of risk. Sailfish Royalty Corp is currently generating about -0.2 per unit of risk. If you would invest  74.00  in Orezone Gold Corp on September 4, 2024 and sell it today you would lose (3.00) from holding Orezone Gold Corp or give up 4.05% of portfolio value over 90 days.

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

Orezone Gold Corp  vs.  Sailfish Royalty Corp

Orezone Gold Corp

Risk-Adjusted Performance

1 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Orezone Gold Corp are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy technical and fundamental indicators, Orezone Gold is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Sailfish Royalty Corp

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Sailfish Royalty Corp are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, Sailfish Royalty showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Orezone Gold and Sailfish Royalty

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

The idea behind Orezone Gold Corp and Sailfish Royalty 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.