Correlation Between Orinko Advanced and Eternal Asia

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

By analyzing existing cross correlation between Orinko Advanced Plastics and Eternal Asia Supply, you can compare the effects of market volatilities on Orinko Advanced and Eternal Asia 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 Orinko Advanced with a short position of Eternal Asia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Orinko Advanced and Eternal Asia.

Diversification Opportunities for Orinko Advanced and Eternal Asia

0.22

Correlation Coefficient

Orinko Advanced  Eternal Asia

Modest diversification

The 3 months correlation between Orinko and Eternal is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Orinko Advanced Plastics and Eternal Asia Supply in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eternal Asia Supply and Orinko Advanced 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 Orinko Advanced Plastics are associated (or correlated) with Eternal Asia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eternal Asia Supply has no effect on the direction of Orinko Advanced i.e., Orinko Advanced and Eternal Asia go up and down completely randomly.

Pair Corralation between Orinko Advanced and Eternal Asia

Assuming the 90 days trading horizon Orinko Advanced Plastics is expected to generate 1.11 times more return on investment than Eternal Asia. However, Orinko Advanced is 1.11 times more volatile than Eternal Asia Supply. It trades about 0.02 of its potential returns per unit of risk. Eternal Asia Supply is currently generating about -0.02 per unit of risk. If you would invest  934.00  in Orinko Advanced Plastics on October 12, 2024 and sell it today you would earn a total of  90.00  from holding Orinko Advanced Plastics or generate 9.64% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	99.79%
Values	Daily Returns

Orinko Advanced Plastics  vs.  Eternal Asia Supply

Orinko Advanced Plastics

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Orinko Advanced Plastics are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Orinko Advanced sustained solid returns over the last few months and may actually be approaching a breakup point.

Eternal Asia Supply

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Eternal Asia Supply are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Eternal Asia sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Orinko Advanced and Eternal Asia

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

The idea behind Orinko Advanced Plastics and Eternal Asia Supply 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 CEOs Directory module to screen CEOs from public companies around the world.