Correlation Between Orla Mining and Japan Gold

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

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

Diversification Opportunities for Orla Mining and Japan Gold

0.2

Correlation Coefficient

Orla Mining  Japan Gold

Modest diversification

The 3 months correlation between Orla and Japan is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Orla Mining and Japan Gold Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Japan Gold Corp and Orla 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 Orla Mining are associated (or correlated) with Japan Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Japan Gold Corp has no effect on the direction of Orla Mining i.e., Orla Mining and Japan Gold go up and down completely randomly.

Pair Corralation between Orla Mining and Japan Gold

Given the investment horizon of 90 days Orla Mining is expected to generate 0.49 times more return on investment than Japan Gold. However, Orla Mining is 2.06 times less risky than Japan Gold. It trades about 0.11 of its potential returns per unit of risk. Japan Gold Corp is currently generating about 0.05 per unit of risk. If you would invest  395.00  in Orla Mining on September 3, 2024 and sell it today you would earn a total of  82.00  from holding Orla Mining or generate 20.76% return on investment over 90 days.

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

Orla Mining  vs.  Japan Gold Corp

Orla Mining

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Orla Mining are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating essential indicators, Orla Mining sustained solid returns over the last few months and may actually be approaching a breakup point.

Japan Gold Corp

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Japan Gold Corp are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak fundamental indicators, Japan Gold reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Orla Mining and Japan Gold

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

The idea behind Orla Mining and Japan Gold Corp 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.