Correlation Between Zoje Resources and Orient Sec

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

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

Diversification Opportunities for Zoje Resources and Orient Sec

0.71

Correlation Coefficient

Zoje Resources  Orient Sec

Poor diversification

The 3 months correlation between Zoje and Orient is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Zoje Resources Investment and Orient Sec Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Orient Sec and Zoje 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 Zoje Resources Investment are associated (or correlated) with Orient Sec. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Orient Sec has no effect on the direction of Zoje Resources i.e., Zoje Resources and Orient Sec go up and down completely randomly.

Pair Corralation between Zoje Resources and Orient Sec

Assuming the 90 days trading horizon Zoje Resources Investment is expected to under-perform the Orient Sec. In addition to that, Zoje Resources is 1.52 times more volatile than Orient Sec Co. It trades about -0.07 of its total potential returns per unit of risk. Orient Sec Co is currently generating about -0.1 per unit of volatility. If you would invest  1,073  in Orient Sec Co on December 24, 2024 and sell it today you would lose (107.00) from holding Orient Sec Co or give up 9.97% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.31%
Values	Daily Returns

Zoje Resources Investment  vs.  Orient Sec Co

Zoje Resources Investment

Risk-Adjusted Performance

Very Weak

Over the last 90 days Zoje Resources Investment has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Orient Sec

Risk-Adjusted Performance

Very Weak

Over the last 90 days Orient Sec Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Zoje Resources and Orient Sec

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

The idea behind Zoje Resources Investment and Orient Sec Co 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.