Correlation Between Tristar Gold and Orex Minerals

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

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

Diversification Opportunities for Tristar Gold and Orex Minerals

0.03

Correlation Coefficient

Tristar Gold  Orex Minerals

Significant diversification

The 3 months correlation between Tristar and Orex is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Tristar Gold and Orex Minerals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Orex Minerals and Tristar Gold 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 Tristar Gold are associated (or correlated) with Orex Minerals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Orex Minerals has no effect on the direction of Tristar Gold i.e., Tristar Gold and Orex Minerals go up and down completely randomly.

Pair Corralation between Tristar Gold and Orex Minerals

Assuming the 90 days horizon Tristar Gold is expected to generate 0.86 times more return on investment than Orex Minerals. However, Tristar Gold is 1.16 times less risky than Orex Minerals. It trades about 0.13 of its potential returns per unit of risk. Orex Minerals is currently generating about 0.03 per unit of risk. If you would invest  14.00  in Tristar Gold on December 22, 2024 and sell it today you would earn a total of  6.00  from holding Tristar Gold or generate 42.86% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.39%
Values	Daily Returns

Tristar Gold  vs.  Orex Minerals

Tristar Gold

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Tristar Gold are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Tristar Gold showed solid returns over the last few months and may actually be approaching a breakup point.

Orex Minerals

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Orex Minerals are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Orex Minerals showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Tristar Gold and Orex Minerals

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

The idea behind Tristar Gold and Orex Minerals 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.

Check out your portfolio center.

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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.