Correlation Between Acerinox and Oryzon Genomics

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

By analyzing existing cross correlation between Acerinox and Oryzon Genomics SA, you can compare the effects of market volatilities on Acerinox and Oryzon Genomics 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 Acerinox with a short position of Oryzon Genomics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Acerinox and Oryzon Genomics.

Diversification Opportunities for Acerinox and Oryzon Genomics

0.84

Correlation Coefficient

Acerinox  Oryzon Genomics

Very poor diversification

The 3 months correlation between Acerinox and Oryzon is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Acerinox and Oryzon Genomics SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oryzon Genomics SA and Acerinox 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 Acerinox are associated (or correlated) with Oryzon Genomics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oryzon Genomics SA has no effect on the direction of Acerinox i.e., Acerinox and Oryzon Genomics go up and down completely randomly.

Pair Corralation between Acerinox and Oryzon Genomics

Assuming the 90 days trading horizon Acerinox is expected to generate 3.79 times less return on investment than Oryzon Genomics. But when comparing it to its historical volatility, Acerinox is 4.26 times less risky than Oryzon Genomics. It trades about 0.25 of its potential returns per unit of risk. Oryzon Genomics SA is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest  152.00  in Oryzon Genomics SA on December 21, 2024 and sell it today you would earn a total of  173.00  from holding Oryzon Genomics SA or generate 113.82% return on investment over 90 days.

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

Acerinox  vs.  Oryzon Genomics SA

Acerinox

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Acerinox are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, Acerinox exhibited solid returns over the last few months and may actually be approaching a breakup point.

Oryzon Genomics SA

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Oryzon Genomics SA are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, Oryzon Genomics exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Acerinox and Oryzon Genomics

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

The idea behind Acerinox and Oryzon Genomics SA 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.