Correlation Between Orefinders Resources and North Peak

Can any of the company-specific risk be diversified away by investing in both Orefinders Resources and North Peak 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 Orefinders Resources and North Peak into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Orefinders Resources and North Peak

-0.79

Correlation Coefficient

Orefinders Resources  North Peak

Pay attention - limited upside

The 3 months correlation between Orefinders and North is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding Orefinders Resources and North Peak Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on North Peak Resources and Orefinders Resources 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 Orefinders Resources are associated (or correlated) with North Peak. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of North Peak Resources has no effect on the direction of Orefinders Resources i.e., Orefinders Resources and North Peak go up and down completely randomly.

Pair Corralation between Orefinders Resources and North Peak

Assuming the 90 days horizon Orefinders Resources is expected to generate 0.63 times more return on investment than North Peak. However, Orefinders Resources is 1.58 times less risky than North Peak. It trades about 0.09 of its potential returns per unit of risk. North Peak Resources is currently generating about -0.05 per unit of risk. If you would invest  4.17  in Orefinders Resources on September 13, 2024 and sell it today you would earn a total of  0.82  from holding Orefinders Resources or generate 19.66% return on investment over 90 days.

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

Orefinders Resources  vs.  North Peak Resources

Orefinders Resources

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Orefinders Resources are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile fundamental indicators, Orefinders Resources reported solid returns over the last few months and may actually be approaching a breakup point.

North Peak Resources

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days North Peak Resources 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 essential indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Orefinders Resources and North Peak

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

The idea behind Orefinders Resources and North Peak Resources 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.