Correlation Between Orezone Gold and Ophir Gold

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

Diversification Opportunities for Orezone Gold and Ophir Gold

-0.61

Correlation Coefficient

Orezone Gold  Ophir Gold

Excellent diversification

The 3 months correlation between Orezone and Ophir is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Orezone Gold Corp and Ophir Gold Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ophir Gold 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 Ophir Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ophir Gold Corp has no effect on the direction of Orezone Gold i.e., Orezone Gold and Ophir Gold go up and down completely randomly.

Pair Corralation between Orezone Gold and Ophir Gold

Assuming the 90 days trading horizon Orezone Gold Corp is expected to generate 0.39 times more return on investment than Ophir Gold. However, Orezone Gold Corp is 2.54 times less risky than Ophir Gold. It trades about 0.21 of its potential returns per unit of risk. Ophir Gold Corp is currently generating about 0.02 per unit of risk. If you would invest  62.00  in Orezone Gold Corp on December 20, 2024 and sell it today you would earn a total of  31.00  from holding Orezone Gold Corp or generate 50.0% return on investment over 90 days.

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

Orezone Gold Corp  vs.  Ophir Gold Corp

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.

Ophir Gold Corp

Risk-Adjusted Performance

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Ophir Gold Corp are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal technical indicators, Ophir Gold may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Orezone Gold and Ophir Gold

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

The idea behind Orezone Gold Corp and Ophir Gold 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.