Correlation Between Orbitech and LB Investment

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

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

Diversification Opportunities for Orbitech and LB Investment

0.58

Correlation Coefficient

Orbitech  LB Investment

Very weak diversification

The 3 months correlation between Orbitech and 309960 is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Orbitech Co and LB Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LB Investment 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 LB Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LB Investment has no effect on the direction of Orbitech i.e., Orbitech and LB Investment go up and down completely randomly.

Pair Corralation between Orbitech and LB Investment

Assuming the 90 days trading horizon Orbitech Co is expected to generate 0.94 times more return on investment than LB Investment. However, Orbitech Co is 1.07 times less risky than LB Investment. It trades about -0.03 of its potential returns per unit of risk. LB Investment is currently generating about -0.05 per unit of risk. If you would invest  479,500  in Orbitech Co on October 25, 2024 and sell it today you would lose (231,500) from holding Orbitech Co or give up 48.28% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	92.32%
Values	Daily Returns

Orbitech Co  vs.  LB Investment

Orbitech

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Orbitech Co are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Orbitech may actually be approaching a critical reversion point that can send shares even higher in February 2025.

LB Investment

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days LB Investment 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.

Pair Trading with Orbitech and LB Investment

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

The idea behind Orbitech Co and LB Investment 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.