Correlation Between Orbitech and Amogreentech

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

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

Diversification Opportunities for Orbitech and Amogreentech

0.03

Correlation Coefficient

Orbitech  Amogreentech

Significant diversification

The 3 months correlation between Orbitech and Amogreentech is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Orbitech Co and Amogreentech Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amogreentech 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 Amogreentech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amogreentech has no effect on the direction of Orbitech i.e., Orbitech and Amogreentech go up and down completely randomly.

Pair Corralation between Orbitech and Amogreentech

Assuming the 90 days trading horizon Orbitech Co is expected to generate 0.82 times more return on investment than Amogreentech. However, Orbitech Co is 1.22 times less risky than Amogreentech. It trades about -0.02 of its potential returns per unit of risk. Amogreentech Co is currently generating about -0.1 per unit of risk. If you would invest  235,000  in Orbitech Co on September 4, 2024 and sell it today you would lose (12,500) from holding Orbitech Co or give up 5.32% of portfolio value over 90 days.

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

Orbitech Co  vs.  Amogreentech Co

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 somewhat strong basic indicators, Orbitech is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Amogreentech

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Amogreentech 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 January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Orbitech and Amogreentech

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

The idea behind Orbitech Co and Amogreentech 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.

Check out your portfolio center.

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 Global Correlations module to find global opportunities by holding instruments from different markets.