Correlation Between Orient Europharma and Excelsior Biopharma

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

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

Diversification Opportunities for Orient Europharma and Excelsior Biopharma

0.21

Correlation Coefficient

Orient Europharma  Excelsior Biopharma

Modest diversification

The 3 months correlation between Orient and Excelsior is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Orient Europharma Co and Excelsior Biopharma in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Excelsior Biopharma and Orient Europharma 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 Orient Europharma Co are associated (or correlated) with Excelsior Biopharma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Excelsior Biopharma has no effect on the direction of Orient Europharma i.e., Orient Europharma and Excelsior Biopharma go up and down completely randomly.

Pair Corralation between Orient Europharma and Excelsior Biopharma

Assuming the 90 days trading horizon Orient Europharma Co is expected to generate 0.98 times more return on investment than Excelsior Biopharma. However, Orient Europharma Co is 1.02 times less risky than Excelsior Biopharma. It trades about 0.07 of its potential returns per unit of risk. Excelsior Biopharma is currently generating about -0.02 per unit of risk. If you would invest  4,755  in Orient Europharma Co on December 24, 2024 and sell it today you would earn a total of  315.00  from holding Orient Europharma Co or generate 6.62% return on investment over 90 days.

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

Orient Europharma Co  vs.  Excelsior Biopharma

Orient Europharma

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Orient Europharma Co are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Orient Europharma may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Excelsior Biopharma

Risk-Adjusted Performance

Very Weak

Over the last 90 days Excelsior Biopharma has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Excelsior Biopharma is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Orient Europharma and Excelsior Biopharma

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

The idea behind Orient Europharma Co and Excelsior Biopharma 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.