Correlation Between Orogen Royalties and Argonaut Gold

Can any of the company-specific risk be diversified away by investing in both Orogen Royalties and Argonaut 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 Argonaut 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 Argonaut Gold, you can compare the effects of market volatilities on Orogen Royalties and Argonaut 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 Argonaut Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Orogen Royalties and Argonaut Gold.

Diversification Opportunities for Orogen Royalties and Argonaut Gold

-0.08

Correlation Coefficient

Orogen Royalties  Argonaut Gold

Good diversification

The 3 months correlation between Orogen and Argonaut is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Orogen Royalties and Argonaut Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Argonaut 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 Argonaut Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Argonaut Gold has no effect on the direction of Orogen Royalties i.e., Orogen Royalties and Argonaut Gold go up and down completely randomly.

Pair Corralation between Orogen Royalties and Argonaut Gold

Assuming the 90 days horizon Orogen Royalties is expected to generate 0.57 times more return on investment than Argonaut Gold. However, Orogen Royalties is 1.77 times less risky than Argonaut Gold. It trades about 0.08 of its potential returns per unit of risk. Argonaut Gold is currently generating about 0.02 per unit of risk. If you would invest  39.00  in Orogen Royalties on September 14, 2024 and sell it today you would earn a total of  54.00  from holding Orogen Royalties or generate 138.46% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	78.95%
Values	Daily Returns

Orogen Royalties  vs.  Argonaut 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.

Argonaut Gold

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Argonaut Gold has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, Argonaut Gold is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Orogen Royalties and Argonaut Gold

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

The idea behind Orogen Royalties and Argonaut 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.

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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.