Correlation Between Orestone Mining and China Gold
Can any of the company-specific risk be diversified away by investing in both Orestone Mining and China Gold 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 Orestone Mining and China Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Orestone Mining Corp and China Gold International, you can compare the effects of market volatilities on Orestone Mining and China Gold 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 Orestone Mining with a short position of China Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Orestone Mining and China Gold.
Diversification Opportunities for Orestone Mining and China Gold
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Orestone and China is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Orestone Mining Corp and China Gold International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Gold International and Orestone Mining 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 Orestone Mining Corp are associated (or correlated) with China Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Gold International has no effect on the direction of Orestone Mining i.e., Orestone Mining and China Gold go up and down completely randomly.
Pair Corralation between Orestone Mining and China Gold
Assuming the 90 days horizon Orestone Mining Corp is expected to generate 3.41 times more return on investment than China Gold. However, Orestone Mining is 3.41 times more volatile than China Gold International. It trades about 0.03 of its potential returns per unit of risk. China Gold International is currently generating about 0.08 per unit of risk. If you would invest 4.00 in Orestone Mining Corp on January 19, 2024 and sell it today you would lose (1.00) from holding Orestone Mining Corp or give up 25.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Orestone Mining Corp vs. China Gold International
Performance |
| Timeline |
| Orestone Mining Corp |
| China Gold International |
Orestone Mining and China Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Orestone Mining and China Gold
The main advantage of trading using opposite Orestone Mining and China Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Orestone Mining position performs unexpectedly, China Gold 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 China Gold will offset losses from the drop in China Gold's long position.The idea behind Orestone Mining Corp and China Gold International 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.| China Gold vs. International Tower Hill | China Gold vs. Dundee Precious Metals | China Gold vs. Centerra Gold | China Gold vs. Loncor Resources |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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