Correlation Between Credit Corp and Orora

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

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

Diversification Opportunities for Credit Corp and Orora

-0.56

Correlation Coefficient

Credit Corp  Orora

Excellent diversification

The 3 months correlation between Credit and Orora is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Credit Corp Group and Orora in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Orora and Credit Corp 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 Credit Corp Group are associated (or correlated) with Orora. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Orora has no effect on the direction of Credit Corp i.e., Credit Corp and Orora go up and down completely randomly.

Pair Corralation between Credit Corp and Orora

Assuming the 90 days trading horizon Credit Corp Group is expected to generate 1.1 times more return on investment than Orora. However, Credit Corp is 1.1 times more volatile than Orora. It trades about 0.17 of its potential returns per unit of risk. Orora is currently generating about 0.0 per unit of risk. If you would invest  1,485  in Credit Corp Group on August 30, 2024 and sell it today you would earn a total of  292.00  from holding Credit Corp Group or generate 19.66% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.46%
Values	Daily Returns

Credit Corp Group  vs.  Orora

Credit Corp Group

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Credit Corp Group are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Credit Corp unveiled solid returns over the last few months and may actually be approaching a breakup point.

Orora

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Orora has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Orora is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Credit Corp and Orora

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

The idea behind Credit Corp Group and Orora 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 Global Correlations module to find global opportunities by holding instruments from different markets.