Correlation Between Oroco Resource and Magna Mining

Can any of the company-specific risk be diversified away by investing in both Oroco Resource and Magna Mining 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 Oroco Resource and Magna Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Oroco Resource Corp and Magna Mining, you can compare the effects of market volatilities on Oroco Resource and Magna Mining 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 Oroco Resource with a short position of Magna Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Oroco Resource and Magna Mining.

Diversification Opportunities for Oroco Resource and Magna Mining

0.15

Correlation Coefficient

Oroco Resource  Magna Mining

Average diversification

The 3 months correlation between Oroco and Magna is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Oroco Resource Corp and Magna Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Magna Mining and Oroco Resource 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 Oroco Resource Corp are associated (or correlated) with Magna Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Magna Mining has no effect on the direction of Oroco Resource i.e., Oroco Resource and Magna Mining go up and down completely randomly.

Pair Corralation between Oroco Resource and Magna Mining

Assuming the 90 days horizon Oroco Resource Corp is expected to generate 1.52 times more return on investment than Magna Mining. However, Oroco Resource is 1.52 times more volatile than Magna Mining. It trades about 0.15 of its potential returns per unit of risk. Magna Mining is currently generating about 0.11 per unit of risk. If you would invest  19.00  in Oroco Resource Corp on December 28, 2024 and sell it today you would earn a total of  10.00  from holding Oroco Resource Corp or generate 52.63% return on investment over 90 days.

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

Oroco Resource Corp  vs.  Magna Mining

Oroco Resource Corp

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Oroco Resource Corp are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile fundamental indicators, Oroco Resource reported solid returns over the last few months and may actually be approaching a breakup point.

Magna Mining

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Magna Mining are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Magna Mining reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Oroco Resource and Magna Mining

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

The idea behind Oroco Resource Corp and Magna Mining 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.