Correlation Between Safe and OceanaGold

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

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

Diversification Opportunities for Safe and OceanaGold

-0.2

Correlation Coefficient

Safe  OceanaGold

Good diversification

The 3 months correlation between Safe and OceanaGold is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Safe and Green and OceanaGold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OceanaGold and Safe 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 Safe and Green are associated (or correlated) with OceanaGold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OceanaGold has no effect on the direction of Safe i.e., Safe and OceanaGold go up and down completely randomly.

Pair Corralation between Safe and OceanaGold

Considering the 90-day investment horizon Safe and Green is expected to under-perform the OceanaGold. In addition to that, Safe is 2.21 times more volatile than OceanaGold. It trades about -0.12 of its total potential returns per unit of risk. OceanaGold is currently generating about 0.11 per unit of volatility. If you would invest  275.00  in OceanaGold on December 29, 2024 and sell it today you would earn a total of  53.00  from holding OceanaGold or generate 19.27% return on investment over 90 days.

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

Safe and Green  vs.  OceanaGold

Safe and Green

Risk-Adjusted Performance

Very Weak

Over the last 90 days Safe and Green has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

OceanaGold

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in OceanaGold are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, OceanaGold reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Safe and OceanaGold

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

The idea behind Safe and Green and OceanaGold 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.