Correlation Between Orbitech and Naver

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

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

Diversification Opportunities for Orbitech and Naver

-0.69

Correlation Coefficient

Orbitech  Naver

Excellent diversification

The 3 months correlation between Orbitech and Naver is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Orbitech Co and Naver in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Naver and Orbitech 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 Orbitech Co are associated (or correlated) with Naver. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Naver has no effect on the direction of Orbitech i.e., Orbitech and Naver go up and down completely randomly.

Pair Corralation between Orbitech and Naver

Assuming the 90 days trading horizon Orbitech Co is expected to generate 0.86 times more return on investment than Naver. However, Orbitech Co is 1.16 times less risky than Naver. It trades about 0.28 of its potential returns per unit of risk. Naver is currently generating about 0.0 per unit of risk. If you would invest  180,000  in Orbitech Co on October 8, 2024 and sell it today you would earn a total of  20,000  from holding Orbitech Co or generate 11.11% return on investment over 90 days.

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

Orbitech Co  vs.  Naver

Orbitech

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Orbitech Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Naver

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Naver are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Naver sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Orbitech and Naver

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

The idea behind Orbitech Co and Naver 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.