Correlation Between Argo Gold and Orogen Royalties

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Can any of the company-specific risk be diversified away by investing in both Argo Gold 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 Argo Gold and Orogen Royalties into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Argo Gold and Orogen Royalties, you can compare the effects of market volatilities on Argo Gold 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 Argo Gold with a short position of Orogen Royalties. Check out your portfolio center. Please also check ongoing floating volatility patterns of Argo Gold and Orogen Royalties.

Diversification Opportunities for Argo Gold and Orogen Royalties

0.52
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Argo and Orogen is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Argo Gold and Orogen Royalties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Orogen Royalties and Argo 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 Argo Gold 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 Argo Gold i.e., Argo Gold and Orogen Royalties go up and down completely randomly.

Pair Corralation between Argo Gold and Orogen Royalties

Assuming the 90 days horizon Argo Gold is expected to generate 2.4 times more return on investment than Orogen Royalties. However, Argo Gold is 2.4 times more volatile than Orogen Royalties. It trades about 0.03 of its potential returns per unit of risk. Orogen Royalties is currently generating about -0.08 per unit of risk. If you would invest  5.82  in Argo Gold on September 15, 2024 and sell it today you would lose (0.12) from holding Argo Gold or give up 2.06% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Argo Gold  vs.  Orogen Royalties

 Performance 
       Timeline  
Argo Gold 

Risk-Adjusted Performance

2 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Argo Gold are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Argo Gold reported solid returns over the last few months and may actually be approaching a breakup point.
Orogen Royalties 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Orogen Royalties has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Argo Gold and Orogen Royalties Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Argo Gold and Orogen Royalties

The main advantage of trading using opposite Argo Gold and Orogen Royalties positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Argo Gold 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 Argo Gold 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.
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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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.

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