Correlation Between Red Pine and Osisko Metals

Can any of the company-specific risk be diversified away by investing in both Red Pine and Osisko Metals 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 Red Pine and Osisko Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Red Pine Exploration and Osisko Metals, you can compare the effects of market volatilities on Red Pine and Osisko Metals 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 Red Pine with a short position of Osisko Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Red Pine and Osisko Metals.

Diversification Opportunities for Red Pine and Osisko Metals

-0.29

Correlation Coefficient

Red Pine  Osisko Metals

Very good diversification

The 3 months correlation between Red and Osisko is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Red Pine Exploration and Osisko Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Osisko Metals and Red Pine 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 Red Pine Exploration are associated (or correlated) with Osisko Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Osisko Metals has no effect on the direction of Red Pine i.e., Red Pine and Osisko Metals go up and down completely randomly.

Pair Corralation between Red Pine and Osisko Metals

Assuming the 90 days horizon Red Pine is expected to generate 5.56 times less return on investment than Osisko Metals. In addition to that, Red Pine is 1.04 times more volatile than Osisko Metals. It trades about 0.03 of its total potential returns per unit of risk. Osisko Metals is currently generating about 0.15 per unit of volatility. If you would invest  32.00  in Osisko Metals on December 27, 2024 and sell it today you would earn a total of  14.00  from holding Osisko Metals or generate 43.75% return on investment over 90 days.

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

Red Pine Exploration  vs.  Osisko Metals

Red Pine Exploration

Risk-Adjusted Performance

Weak

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

Osisko Metals

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Osisko Metals are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Osisko Metals showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Red Pine and Osisko Metals

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

The idea behind Red Pine Exploration and Osisko Metals 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.