Correlation Between O3 Mining and Skeena Resources

Can any of the company-specific risk be diversified away by investing in both O3 Mining and Skeena Resources 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 O3 Mining and Skeena Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between O3 Mining and Skeena Resources, you can compare the effects of market volatilities on O3 Mining and Skeena Resources 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 O3 Mining with a short position of Skeena Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of O3 Mining and Skeena Resources.

Diversification Opportunities for O3 Mining and Skeena Resources

0.38

Correlation Coefficient

O3 Mining  Skeena Resources

Weak diversification

The 3 months correlation between OIIIF and Skeena is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding O3 Mining and Skeena Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Skeena Resources and O3 Mining 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 O3 Mining are associated (or correlated) with Skeena Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Skeena Resources has no effect on the direction of O3 Mining i.e., O3 Mining and Skeena Resources go up and down completely randomly.

Pair Corralation between O3 Mining and Skeena Resources

Assuming the 90 days horizon O3 Mining is expected to generate 2.96 times less return on investment than Skeena Resources. In addition to that, O3 Mining is 1.52 times more volatile than Skeena Resources. It trades about 0.03 of its total potential returns per unit of risk. Skeena Resources is currently generating about 0.12 per unit of volatility. If you would invest  735.00  in Skeena Resources on September 4, 2024 and sell it today you would earn a total of  180.00  from holding Skeena Resources or generate 24.49% return on investment over 90 days.

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

O3 Mining  vs.  Skeena Resources

O3 Mining

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in O3 Mining are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile forward indicators, O3 Mining may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Skeena Resources

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Skeena Resources are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating forward-looking signals, Skeena Resources exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with O3 Mining and Skeena Resources

The main advantage of trading using opposite O3 Mining and Skeena Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if O3 Mining position performs unexpectedly, Skeena Resources 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 Skeena Resources will offset losses from the drop in Skeena Resources' long position.

The idea behind O3 Mining and Skeena Resources 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.