Correlation Between Cots Technology and Oriental Precision
Can any of the company-specific risk be diversified away by investing in both Cots Technology and Oriental Precision 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 Cots Technology and Oriental Precision into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cots Technology Co and Oriental Precision Engineering, you can compare the effects of market volatilities on Cots Technology and Oriental Precision 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 Cots Technology with a short position of Oriental Precision. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cots Technology and Oriental Precision.
Diversification Opportunities for Cots Technology and Oriental Precision
-0.82 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Cots and Oriental is -0.82. Overlapping area represents the amount of risk that can be diversified away by holding Cots Technology Co and Oriental Precision Engineering in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oriental Precision and Cots Technology 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 Cots Technology Co are associated (or correlated) with Oriental Precision. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oriental Precision has no effect on the direction of Cots Technology i.e., Cots Technology and Oriental Precision go up and down completely randomly.
Pair Corralation between Cots Technology and Oriental Precision
Assuming the 90 days trading horizon Cots Technology Co is expected to under-perform the Oriental Precision. But the stock apears to be less risky and, when comparing its historical volatility, Cots Technology Co is 1.05 times less risky than Oriental Precision. The stock trades about -0.27 of its potential returns per unit of risk. The Oriental Precision Engineering is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest 538,000 in Oriental Precision Engineering on September 25, 2024 and sell it today you would lose (21,000) from holding Oriental Precision Engineering or give up 3.9% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Significant |
Accuracy | 95.45% |
Values | Daily Returns |
Cots Technology Co vs. Oriental Precision Engineering
Performance |
Timeline |
Cots Technology |
Oriental Precision |
Cots Technology and Oriental Precision Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Cots Technology and Oriental Precision
The main advantage of trading using opposite Cots Technology and Oriental Precision positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cots Technology position performs unexpectedly, Oriental Precision 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 Oriental Precision will offset losses from the drop in Oriental Precision's long position.Cots Technology vs. Samsung Electronics Co | Cots Technology vs. Samsung Electronics Co | Cots Technology vs. LG Energy Solution | Cots Technology vs. SK Hynix |
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Check out your portfolio center.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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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