Correlation Between Orogen Royalties and Fortuna Silver

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

By analyzing existing cross correlation between Orogen Royalties and Fortuna Silver Mines, you can compare the effects of market volatilities on Orogen Royalties and Fortuna Silver 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 Fortuna Silver. Check out your portfolio center. Please also check ongoing floating volatility patterns of Orogen Royalties and Fortuna Silver.

Diversification Opportunities for Orogen Royalties and Fortuna Silver

0.27

Correlation Coefficient

Orogen Royalties  Fortuna Silver

Modest diversification

The 3 months correlation between Orogen and Fortuna is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Orogen Royalties and Fortuna Silver Mines in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fortuna Silver Mines 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 Fortuna Silver. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fortuna Silver Mines has no effect on the direction of Orogen Royalties i.e., Orogen Royalties and Fortuna Silver go up and down completely randomly.

Pair Corralation between Orogen Royalties and Fortuna Silver

Assuming the 90 days horizon Orogen Royalties is expected to under-perform the Fortuna Silver. In addition to that, Orogen Royalties is 1.0 times more volatile than Fortuna Silver Mines. It trades about -0.12 of its total potential returns per unit of risk. Fortuna Silver Mines is currently generating about 0.05 per unit of volatility. If you would invest  469.00  in Fortuna Silver Mines on September 13, 2024 and sell it today you would earn a total of  23.00  from holding Fortuna Silver Mines or generate 4.9% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	97.67%
Values	Daily Returns

Orogen Royalties  vs.  Fortuna Silver Mines

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.

Fortuna Silver Mines

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Fortuna Silver Mines are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Fortuna Silver is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Orogen Royalties and Fortuna Silver

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

The idea behind Orogen Royalties and Fortuna Silver Mines 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.