Correlation Between Orogen Royalties and Argo Gold

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

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

Diversification Opportunities for Orogen Royalties and Argo Gold

0.52

Correlation Coefficient

Orogen Royalties  Argo Gold

Very weak diversification

The 3 months correlation between Orogen and Argo is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Orogen Royalties and Argo Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Argo Gold and Orogen Royalties 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 Orogen Royalties are associated (or correlated) with Argo Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Argo Gold has no effect on the direction of Orogen Royalties i.e., Orogen Royalties and Argo Gold go up and down completely randomly.

Pair Corralation between Orogen Royalties and Argo Gold

Assuming the 90 days horizon Orogen Royalties is expected to under-perform the Argo Gold. But the pink sheet apears to be less risky and, when comparing its historical volatility, Orogen Royalties is 2.4 times less risky than Argo Gold. The pink sheet trades about -0.08 of its potential returns per unit of risk. The Argo Gold is currently generating about 0.03 of returns per unit of risk over similar time horizon. 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 Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Orogen Royalties  vs.  Argo Gold

Orogen Royalties

Risk-Adjusted Performance

0 of 100

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

Risk-Adjusted Performance

2 of 100

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.

Pair Trading with Orogen Royalties and Argo Gold

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

The idea behind Orogen Royalties and Argo Gold 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.