Correlation Between Orezone Gold and Vulcan Minerals

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

Diversification Opportunities for Orezone Gold and Vulcan Minerals

0.66

Correlation Coefficient

Orezone Gold  Vulcan Minerals

Poor diversification

The 3 months correlation between Orezone and Vulcan is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Orezone Gold Corp and Vulcan Minerals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vulcan Minerals 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 Vulcan Minerals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vulcan Minerals has no effect on the direction of Orezone Gold i.e., Orezone Gold and Vulcan Minerals go up and down completely randomly.

Pair Corralation between Orezone Gold and Vulcan Minerals

Assuming the 90 days trading horizon Orezone Gold Corp is expected to under-perform the Vulcan Minerals. But the stock apears to be less risky and, when comparing its historical volatility, Orezone Gold Corp is 1.04 times less risky than Vulcan Minerals. The stock trades about -0.07 of its potential returns per unit of risk. The Vulcan Minerals is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  13.00  in Vulcan Minerals on September 24, 2024 and sell it today you would lose (1.00) from holding Vulcan Minerals or give up 7.69% 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.  Vulcan Minerals

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 abnormal performance in the last few months, the Stock's technical and fundamental indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Vulcan Minerals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vulcan Minerals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Vulcan Minerals is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Orezone Gold and Vulcan Minerals

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

The idea behind Orezone Gold Corp and Vulcan Minerals 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.