Correlation Between LB Investment and Orbitech

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Can any of the company-specific risk be diversified away by investing in both LB Investment 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 LB Investment and Orbitech into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LB Investment and Orbitech Co, you can compare the effects of market volatilities on LB Investment 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 LB Investment with a short position of Orbitech. Check out your portfolio center. Please also check ongoing floating volatility patterns of LB Investment and Orbitech.

Diversification Opportunities for LB Investment and Orbitech

0.76
  Correlation Coefficient

Poor diversification

The 3 months correlation between 309960 and Orbitech is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding LB Investment and Orbitech Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Orbitech and LB Investment 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 LB Investment 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 LB Investment i.e., LB Investment and Orbitech go up and down completely randomly.

Pair Corralation between LB Investment and Orbitech

Assuming the 90 days trading horizon LB Investment is expected to under-perform the Orbitech. But the stock apears to be less risky and, when comparing its historical volatility, LB Investment is 1.22 times less risky than Orbitech. The stock trades about -0.12 of its potential returns per unit of risk. The Orbitech Co is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest  234,000  in Orbitech Co on October 10, 2024 and sell it today you would lose (29,500) from holding Orbitech Co or give up 12.61% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

LB Investment  vs.  Orbitech Co

 Performance 
       Timeline  
LB Investment 

Risk-Adjusted Performance

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Weak
 
Strong
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.
Orbitech 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Orbitech Co 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.

LB Investment and Orbitech Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with LB Investment and Orbitech

The main advantage of trading using opposite LB Investment and Orbitech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LB Investment 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 LB Investment 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.

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