Correlation Between World Copper and Orogen Royalties

Can any of the company-specific risk be diversified away by investing in both World 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 World 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 World Copper and Orogen Royalties, you can compare the effects of market volatilities on World 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 World Copper with a short position of Orogen Royalties. Check out your portfolio center. Please also check ongoing floating volatility patterns of World Copper and Orogen Royalties.

Diversification Opportunities for World Copper and Orogen Royalties

0.38

Correlation Coefficient

World Copper  Orogen Royalties

Weak diversification

The 3 months correlation between World and Orogen is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding World Copper and Orogen Royalties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Orogen Royalties and World 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 World Copper 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 World Copper i.e., World Copper and Orogen Royalties go up and down completely randomly.

Pair Corralation between World Copper and Orogen Royalties

Assuming the 90 days horizon World Copper is expected to under-perform the Orogen Royalties. In addition to that, World Copper is 2.57 times more volatile than Orogen Royalties. It trades about -0.1 of its total potential returns per unit of risk. Orogen Royalties is currently generating about 0.49 per unit of volatility. If you would invest  130.00  in Orogen Royalties on October 22, 2024 and sell it today you would earn a total of  35.00  from holding Orogen Royalties or generate 26.92% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	94.74%
Values	Daily Returns

World Copper  vs.  Orogen Royalties

World Copper

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days World Copper has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in February 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

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 recent stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with World Copper and Orogen Royalties

The main advantage of trading using opposite World Copper and Orogen Royalties positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if World 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 World Copper 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.

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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.