Correlation Between Hercules Metals and Ophir Gold

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

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

Diversification Opportunities for Hercules Metals and Ophir Gold

0.18

Correlation Coefficient

Hercules Metals  Ophir Gold

Average diversification

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

Pair Corralation between Hercules Metals and Ophir Gold

Assuming the 90 days horizon Hercules Metals Corp is expected to generate 0.72 times more return on investment than Ophir Gold. However, Hercules Metals Corp is 1.39 times less risky than Ophir Gold. It trades about 0.07 of its potential returns per unit of risk. Ophir Gold Corp is currently generating about 0.01 per unit of risk. If you would invest  27.00  in Hercules Metals Corp on April 25, 2025 and sell it today you would earn a total of  65.00  from holding Hercules Metals Corp or generate 240.74% return on investment over 90 days.

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

Hercules Metals Corp  vs.  Ophir Gold Corp

Hercules Metals Corp

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Hercules Metals Corp are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Hercules Metals showed solid returns over the last few months and may actually be approaching a breakup point.

Ophir Gold Corp

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Ophir Gold Corp are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal technical indicators, Ophir Gold showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Hercules Metals and Ophir Gold

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

The idea behind Hercules Metals Corp and Ophir 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.