Correlation Between Robex Resources and Contango ORE

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

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

Diversification Opportunities for Robex Resources and Contango ORE

0.18

Correlation Coefficient

Robex Resources  Contango ORE

Average diversification

The 3 months correlation between Robex and Contango is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Robex Resources and Contango ORE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Contango ORE and Robex Resources 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 Robex Resources are associated (or correlated) with Contango ORE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Contango ORE has no effect on the direction of Robex Resources i.e., Robex Resources and Contango ORE go up and down completely randomly.

Pair Corralation between Robex Resources and Contango ORE

Assuming the 90 days horizon Robex Resources is expected to generate 0.6 times more return on investment than Contango ORE. However, Robex Resources is 1.68 times less risky than Contango ORE. It trades about -0.11 of its potential returns per unit of risk. Contango ORE is currently generating about -0.11 per unit of risk. If you would invest  200.00  in Robex Resources on September 3, 2024 and sell it today you would lose (35.00) from holding Robex Resources or give up 17.5% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.46%
Values	Daily Returns

Robex Resources  vs.  Contango ORE

Robex Resources

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Robex Resources has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's fundamental drivers remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Contango ORE

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Contango ORE has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile 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.

Pair Trading with Robex Resources and Contango ORE

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

The idea behind Robex Resources and Contango ORE 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.