Correlation Between HIM International and Orient Pharma

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

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

Diversification Opportunities for HIM International and Orient Pharma

0.47

Correlation Coefficient

HIM International  Orient Pharma

Very weak diversification

The 3 months correlation between HIM and Orient is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding HIM International Music and Orient Pharma Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Orient Pharma and HIM International 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 HIM International Music are associated (or correlated) with Orient Pharma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Orient Pharma has no effect on the direction of HIM International i.e., HIM International and Orient Pharma go up and down completely randomly.

Pair Corralation between HIM International and Orient Pharma

Assuming the 90 days trading horizon HIM International Music is expected to generate 0.27 times more return on investment than Orient Pharma. However, HIM International Music is 3.69 times less risky than Orient Pharma. It trades about -0.09 of its potential returns per unit of risk. Orient Pharma Co is currently generating about -0.04 per unit of risk. If you would invest  12,300  in HIM International Music on October 6, 2024 and sell it today you would lose (650.00) from holding HIM International Music or give up 5.28% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	97.73%
Values	Daily Returns

HIM International Music  vs.  Orient Pharma Co

HIM International Music

Risk-Adjusted Performance

0 of 100

Very Weak

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

Orient Pharma

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Orient Pharma Co are ranked lower than 10 (%) 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.

Pair Trading with HIM International and Orient Pharma

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

The idea behind HIM International Music and Orient Pharma 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.

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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.