Correlation Between Gold Springs and Orezone Gold

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

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

Diversification Opportunities for Gold Springs and Orezone Gold

0.12

Correlation Coefficient

Gold Springs  Orezone Gold

Average diversification

The 3 months correlation between Gold and Orezone is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Gold Springs Resource and Orezone Gold Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Orezone Gold Corp and Gold Springs 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 Gold Springs Resource are associated (or correlated) with Orezone Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Orezone Gold Corp has no effect on the direction of Gold Springs i.e., Gold Springs and Orezone Gold go up and down completely randomly.

Pair Corralation between Gold Springs and Orezone Gold

Assuming the 90 days trading horizon Gold Springs Resource is expected to generate 1.52 times more return on investment than Orezone Gold. However, Gold Springs is 1.52 times more volatile than Orezone Gold Corp. It trades about 0.08 of its potential returns per unit of risk. Orezone Gold Corp is currently generating about 0.01 per unit of risk. If you would invest  8.00  in Gold Springs Resource on April 24, 2025 and sell it today you would earn a total of  1.50  from holding Gold Springs Resource or generate 18.75% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

Gold Springs Resource  vs.  Orezone Gold Corp

Gold Springs Resource

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Gold Springs Resource are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very fragile fundamental indicators, Gold Springs displayed solid returns over the last few months and may actually be approaching a breakup point.

Orezone Gold Corp

Risk-Adjusted Performance

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.

Pair Trading with Gold Springs and Orezone Gold

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

The idea behind Gold Springs Resource and Orezone 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.