Correlation Between Stic Investments and Orbitech

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

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

Diversification Opportunities for Stic Investments and Orbitech

-0.46

Correlation Coefficient

Stic Investments  Orbitech

Very good diversification

The 3 months correlation between Stic and Orbitech is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Stic Investments and Orbitech Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Orbitech and Stic Investments 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 Stic Investments are associated (or correlated) with Orbitech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Orbitech has no effect on the direction of Stic Investments i.e., Stic Investments and Orbitech go up and down completely randomly.

Pair Corralation between Stic Investments and Orbitech

Assuming the 90 days trading horizon Stic Investments is expected to under-perform the Orbitech. But the stock apears to be less risky and, when comparing its historical volatility, Stic Investments is 1.64 times less risky than Orbitech. The stock trades about -0.09 of its potential returns per unit of risk. The Orbitech Co is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  199,200  in Orbitech Co on December 24, 2024 and sell it today you would earn a total of  40,300  from holding Orbitech Co or generate 20.23% return on investment over 90 days.

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

Stic Investments  vs.  Orbitech Co

Stic Investments

Risk-Adjusted Performance

Very Weak

Over the last 90 days Stic Investments 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.

Orbitech

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Orbitech Co are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Orbitech sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Stic Investments and Orbitech

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

The idea behind Stic Investments and Orbitech 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.