Correlation Between Orezone Gold and RTG Mining

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

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

Diversification Opportunities for Orezone Gold and RTG Mining

0.39

Correlation Coefficient

Orezone Gold  RTG Mining

Weak diversification

The 3 months correlation between Orezone and RTG is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Orezone Gold Corp and RTG Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RTG Mining and Orezone Gold 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 Orezone Gold Corp are associated (or correlated) with RTG Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RTG Mining has no effect on the direction of Orezone Gold i.e., Orezone Gold and RTG Mining go up and down completely randomly.

Pair Corralation between Orezone Gold and RTG Mining

Assuming the 90 days trading horizon Orezone Gold Corp is expected to under-perform the RTG Mining. But the stock apears to be less risky and, when comparing its historical volatility, Orezone Gold Corp is 3.27 times less risky than RTG Mining. The stock trades about -0.05 of its potential returns per unit of risk. The RTG Mining is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  4.00  in RTG Mining on September 12, 2024 and sell it today you would lose (0.50) from holding RTG Mining or give up 12.5% of portfolio value over 90 days.

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

Orezone Gold Corp  vs.  RTG Mining

Orezone Gold Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Orezone Gold Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's technical and fundamental indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

RTG Mining

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in RTG Mining are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very abnormal technical and fundamental indicators, RTG Mining displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Orezone Gold and RTG Mining

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

The idea behind Orezone Gold Corp and RTG Mining 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.