Correlation Between OceanaGold and Calibre Mining

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

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

Diversification Opportunities for OceanaGold and Calibre Mining

0.35

Correlation Coefficient

OceanaGold  Calibre Mining

Weak diversification

The 3 months correlation between OceanaGold and Calibre is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding OceanaGold and Calibre Mining Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Calibre Mining Corp and OceanaGold 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 OceanaGold are associated (or correlated) with Calibre Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Calibre Mining Corp has no effect on the direction of OceanaGold i.e., OceanaGold and Calibre Mining go up and down completely randomly.

Pair Corralation between OceanaGold and Calibre Mining

Assuming the 90 days trading horizon OceanaGold is expected to generate 0.97 times more return on investment than Calibre Mining. However, OceanaGold is 1.03 times less risky than Calibre Mining. It trades about 0.18 of its potential returns per unit of risk. Calibre Mining Corp is currently generating about 0.08 per unit of risk. If you would invest  337.00  in OceanaGold on September 3, 2024 and sell it today you would earn a total of  105.00  from holding OceanaGold or generate 31.16% return on investment over 90 days.

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

OceanaGold  vs.  Calibre Mining Corp

OceanaGold

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in OceanaGold are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating fundamental indicators, OceanaGold displayed solid returns over the last few months and may actually be approaching a breakup point.

Calibre Mining Corp

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Calibre Mining Corp are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very conflicting fundamental drivers, Calibre Mining displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with OceanaGold and Calibre Mining

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

The idea behind OceanaGold and Calibre Mining 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.