Correlation Between Orezone Gold and Freegold Ventures

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

Diversification Opportunities for Orezone Gold and Freegold Ventures

0.56

Correlation Coefficient

Orezone Gold  Freegold Ventures

Very weak diversification

The 3 months correlation between Orezone and Freegold is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Orezone Gold Corp and Freegold Ventures Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Freegold Ventures 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 Freegold Ventures. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Freegold Ventures has no effect on the direction of Orezone Gold i.e., Orezone Gold and Freegold Ventures go up and down completely randomly.

Pair Corralation between Orezone Gold and Freegold Ventures

Assuming the 90 days trading horizon Orezone Gold Corp is expected to generate 0.72 times more return on investment than Freegold Ventures. However, Orezone Gold Corp is 1.39 times less risky than Freegold Ventures. It trades about 0.21 of its potential returns per unit of risk. Freegold Ventures Limited is currently generating about 0.08 per unit of risk. If you would invest  63.00  in Orezone Gold Corp on December 30, 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 Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Orezone Gold Corp  vs.  Freegold Ventures Limited

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.

Freegold Ventures

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Freegold Ventures Limited are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very abnormal essential indicators, Freegold Ventures displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Orezone Gold and Freegold Ventures

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

The idea behind Orezone Gold Corp and Freegold Ventures Limited 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.