Correlation Between Chakana Copper and Orogen Royalties

Can any of the company-specific risk be diversified away by investing in both Chakana Copper and Orogen Royalties 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 Chakana Copper and Orogen Royalties into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Chakana Copper and Orogen Royalties

0.21

Correlation Coefficient

Chakana Copper  Orogen Royalties

Modest diversification

The 3 months correlation between Chakana and Orogen is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Chakana Copper Corp and Orogen Royalties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Orogen Royalties and Chakana Copper 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 Chakana Copper Corp are associated (or correlated) with Orogen Royalties. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Orogen Royalties has no effect on the direction of Chakana Copper i.e., Chakana Copper and Orogen Royalties go up and down completely randomly.

Pair Corralation between Chakana Copper and Orogen Royalties

Assuming the 90 days trading horizon Chakana Copper Corp is expected to under-perform the Orogen Royalties. In addition to that, Chakana Copper is 5.03 times more volatile than Orogen Royalties. It trades about -0.15 of its total potential returns per unit of risk. Orogen Royalties is currently generating about 0.03 per unit of volatility. If you would invest  136.00  in Orogen Royalties on October 10, 2024 and sell it today you would earn a total of  1.00  from holding Orogen Royalties or generate 0.74% return on investment over 90 days.

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

Chakana Copper Corp  vs.  Orogen Royalties

Chakana Copper Corp

Risk-Adjusted Performance

1 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Chakana Copper Corp are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Chakana Copper showed solid returns over the last few months and may actually be approaching a breakup point.

Orogen Royalties

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Orogen Royalties has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Orogen Royalties is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Chakana Copper and Orogen Royalties

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

The idea behind Chakana Copper Corp and Orogen Royalties 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.