Correlation Between Orea Mining and Malaga Financial

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

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

Diversification Opportunities for Orea Mining and Malaga Financial

0.39

Correlation Coefficient

Orea Mining  Malaga Financial

Weak diversification

The 3 months correlation between Orea and Malaga is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Orea Mining Corp and Malaga Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Malaga Financial and Orea 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 Orea Mining Corp are associated (or correlated) with Malaga Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Malaga Financial has no effect on the direction of Orea Mining i.e., Orea Mining and Malaga Financial go up and down completely randomly.

Pair Corralation between Orea Mining and Malaga Financial

Assuming the 90 days horizon Orea Mining Corp is expected to generate 32.09 times more return on investment than Malaga Financial. However, Orea Mining is 32.09 times more volatile than Malaga Financial. It trades about 0.08 of its potential returns per unit of risk. Malaga Financial is currently generating about 0.03 per unit of risk. If you would invest  2.00  in Orea Mining Corp on January 20, 2024 and sell it today you would lose (1.10) from holding Orea Mining Corp or give up 55.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	99.19%
Values	Daily Returns

Orea Mining Corp  vs.  Malaga Financial

Orea Mining Corp

Risk-Adjusted Performance

8 of 100

Very Weak

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

Malaga Financial

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Malaga Financial has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, Malaga Financial is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Orea Mining and Malaga Financial

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

The idea behind Orea Mining Corp and Malaga Financial 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.