Correlation Between Orbitech and TOPMATERIAL

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

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

Diversification Opportunities for Orbitech and TOPMATERIAL

0.58

Correlation Coefficient

Orbitech  TOPMATERIAL

Very weak diversification

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

Pair Corralation between Orbitech and TOPMATERIAL

Assuming the 90 days trading horizon Orbitech Co is expected to generate 0.94 times more return on investment than TOPMATERIAL. However, Orbitech Co is 1.07 times less risky than TOPMATERIAL. It trades about 0.02 of its potential returns per unit of risk. TOPMATERIAL LTD is currently generating about -0.06 per unit of risk. If you would invest  239,000  in Orbitech Co on October 25, 2024 and sell it today you would lose (500.00) from holding Orbitech Co or give up 0.21% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.39%
Values	Daily Returns

Orbitech Co  vs.  TOPMATERIAL LTD

Orbitech

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Orbitech Co are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. 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.

TOPMATERIAL LTD

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days TOPMATERIAL LTD 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 TOPMATERIAL

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

The idea behind Orbitech Co and TOPMATERIAL LTD 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.