Correlation Between Orient Pharma and Fu Burg

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

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

Diversification Opportunities for Orient Pharma and Fu Burg

0.46

Correlation Coefficient

Orient Pharma  Fu Burg

Very weak diversification

The 3 months correlation between Orient and 8929 is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Orient Pharma Co and Fu Burg Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fu Burg Industrial and Orient Pharma 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 Pharma Co are associated (or correlated) with Fu Burg. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fu Burg Industrial has no effect on the direction of Orient Pharma i.e., Orient Pharma and Fu Burg go up and down completely randomly.

Pair Corralation between Orient Pharma and Fu Burg

Assuming the 90 days trading horizon Orient Pharma Co is expected to generate 0.59 times more return on investment than Fu Burg. However, Orient Pharma Co is 1.68 times less risky than Fu Burg. It trades about 0.0 of its potential returns per unit of risk. Fu Burg Industrial is currently generating about -0.05 per unit of risk. If you would invest  3,725  in Orient Pharma Co on September 24, 2024 and sell it today you would lose (25.00) from holding Orient Pharma Co or give up 0.67% of portfolio value over 90 days.

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

Orient Pharma Co  vs.  Fu Burg Industrial

Orient Pharma

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Orient Pharma Co are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Orient Pharma showed solid returns over the last few months and may actually be approaching a breakup point.

Fu Burg Industrial

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Fu Burg Industrial are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Fu Burg showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Orient Pharma and Fu Burg

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

The idea behind Orient Pharma Co and Fu Burg Industrial 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.