Correlation Between Oriental Precision and Nasmedia

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

By analyzing existing cross correlation between Oriental Precision Engineering and Nasmedia Co, you can compare the effects of market volatilities on Oriental Precision and Nasmedia 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 Oriental Precision with a short position of Nasmedia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Oriental Precision and Nasmedia.

Diversification Opportunities for Oriental Precision and Nasmedia

-0.64

Correlation Coefficient

Oriental Precision  Nasmedia

Excellent diversification

The 3 months correlation between Oriental and Nasmedia is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Oriental Precision Engineering and Nasmedia Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nasmedia and Oriental Precision 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 Oriental Precision Engineering are associated (or correlated) with Nasmedia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nasmedia has no effect on the direction of Oriental Precision i.e., Oriental Precision and Nasmedia go up and down completely randomly.

Pair Corralation between Oriental Precision and Nasmedia

Assuming the 90 days trading horizon Oriental Precision is expected to generate 1.0 times less return on investment than Nasmedia. In addition to that, Oriental Precision is 1.92 times more volatile than Nasmedia Co. It trades about 0.08 of its total potential returns per unit of risk. Nasmedia Co is currently generating about 0.15 per unit of volatility. If you would invest  1,428,000  in Nasmedia Co on September 23, 2024 and sell it today you would earn a total of  99,000  from holding Nasmedia Co or generate 6.93% return on investment over 90 days.

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

Oriental Precision Engineering  vs.  Nasmedia Co

Oriental Precision

Risk-Adjusted Performance

8 of 100

OK

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

Nasmedia

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nasmedia Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Nasmedia is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Oriental Precision and Nasmedia

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

The idea behind Oriental Precision Engineering and Nasmedia 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.