Correlation Between Orvana Minerals and Perpetua Resources

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

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

Diversification Opportunities for Orvana Minerals and Perpetua Resources

0.92

Correlation Coefficient

Orvana Minerals  Perpetua Resources

Almost no diversification

The 3 months correlation between Orvana and Perpetua is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Orvana Minerals Corp and Perpetua Resources Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Perpetua Resources Corp and Orvana Minerals 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 Orvana Minerals Corp are associated (or correlated) with Perpetua Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Perpetua Resources Corp has no effect on the direction of Orvana Minerals i.e., Orvana Minerals and Perpetua Resources go up and down completely randomly.

Pair Corralation between Orvana Minerals and Perpetua Resources

Assuming the 90 days trading horizon Orvana Minerals is expected to generate 1.37 times less return on investment than Perpetua Resources. In addition to that, Orvana Minerals is 1.05 times more volatile than Perpetua Resources Corp. It trades about 0.16 of its total potential returns per unit of risk. Perpetua Resources Corp is currently generating about 0.23 per unit of volatility. If you would invest  380.00  in Perpetua Resources Corp on February 13, 2024 and sell it today you would earn a total of  368.00  from holding Perpetua Resources Corp or generate 96.84% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

Orvana Minerals Corp  vs.  Perpetua Resources Corp

Orvana Minerals Corp

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Orvana Minerals Corp are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of very abnormal basic indicators, Orvana Minerals displayed solid returns over the last few months and may actually be approaching a breakup point.

Perpetua Resources Corp

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Perpetua Resources Corp are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of very abnormal basic indicators, Perpetua Resources displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Orvana Minerals and Perpetua Resources

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

The idea behind Orvana Minerals Corp and Perpetua Resources Corp 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.