Correlation Between Orezone Gold and Stella Jones

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

Diversification Opportunities for Orezone Gold and Stella Jones

0.63

Correlation Coefficient

Orezone Gold  Stella Jones

Poor diversification

The 3 months correlation between Orezone and Stella is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Orezone Gold Corp and Stella Jones in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stella Jones 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 Stella Jones. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stella Jones has no effect on the direction of Orezone Gold i.e., Orezone Gold and Stella Jones go up and down completely randomly.

Pair Corralation between Orezone Gold and Stella Jones

Assuming the 90 days trading horizon Orezone Gold Corp is expected to generate 1.47 times more return on investment than Stella Jones. However, Orezone Gold is 1.47 times more volatile than Stella Jones. It trades about -0.09 of its potential returns per unit of risk. Stella Jones is currently generating about -0.18 per unit of risk. If you would invest  78.00  in Orezone Gold Corp on August 31, 2024 and sell it today you would lose (13.00) from holding Orezone Gold Corp or give up 16.67% of portfolio value over 90 days.

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

Orezone Gold Corp  vs.  Stella Jones

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 very healthy technical and fundamental indicators, Orezone Gold is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Stella Jones

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Stella Jones has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in December 2024. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Orezone Gold and Stella Jones

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

The idea behind Orezone Gold Corp and Stella Jones 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.