Correlation Between Arizona Sonoran and OceanaGold

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

By analyzing existing cross correlation between Arizona Sonoran Copper and OceanaGold, you can compare the effects of market volatilities on Arizona Sonoran and OceanaGold 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 Arizona Sonoran with a short position of OceanaGold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arizona Sonoran and OceanaGold.

Diversification Opportunities for Arizona Sonoran and OceanaGold

0.06

Correlation Coefficient

Arizona Sonoran  OceanaGold

Significant diversification

The 3 months correlation between Arizona and OceanaGold is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Arizona Sonoran Copper and OceanaGold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OceanaGold and Arizona Sonoran 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 Arizona Sonoran Copper are associated (or correlated) with OceanaGold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OceanaGold has no effect on the direction of Arizona Sonoran i.e., Arizona Sonoran and OceanaGold go up and down completely randomly.

Pair Corralation between Arizona Sonoran and OceanaGold

Assuming the 90 days trading horizon Arizona Sonoran is expected to generate 1.65 times less return on investment than OceanaGold. In addition to that, Arizona Sonoran is 1.54 times more volatile than OceanaGold. It trades about 0.03 of its total potential returns per unit of risk. OceanaGold is currently generating about 0.08 per unit of volatility. If you would invest  319.00  in OceanaGold on September 30, 2024 and sell it today you would earn a total of  83.00  from holding OceanaGold or generate 26.02% return on investment over 90 days.

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

Arizona Sonoran Copper  vs.  OceanaGold

Arizona Sonoran Copper

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Arizona Sonoran Copper has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

OceanaGold

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in OceanaGold are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating fundamental indicators, OceanaGold may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Arizona Sonoran and OceanaGold

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

The idea behind Arizona Sonoran Copper and OceanaGold 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.