Correlation Between Crown Electrokinetics and Orion Engineered

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

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

Diversification Opportunities for Crown Electrokinetics and Orion Engineered

-0.15

Correlation Coefficient

Crown Electrokinetics  Orion Engineered

Good diversification

The 3 months correlation between Crown and Orion is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Crown Electrokinetics Corp and Orion Engineered Carbons in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Orion Engineered Carbons and Crown Electrokinetics 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 Crown Electrokinetics Corp are associated (or correlated) with Orion Engineered. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Orion Engineered Carbons has no effect on the direction of Crown Electrokinetics i.e., Crown Electrokinetics and Orion Engineered go up and down completely randomly.

Pair Corralation between Crown Electrokinetics and Orion Engineered

Given the investment horizon of 90 days Crown Electrokinetics Corp is expected to under-perform the Orion Engineered. In addition to that, Crown Electrokinetics is 2.46 times more volatile than Orion Engineered Carbons. It trades about -0.29 of its total potential returns per unit of risk. Orion Engineered Carbons is currently generating about 0.06 per unit of volatility. If you would invest  1,777  in Orion Engineered Carbons on September 3, 2024 and sell it today you would earn a total of  153.00  from holding Orion Engineered Carbons or generate 8.61% return on investment over 90 days.

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

Crown Electrokinetics Corp  vs.  Orion Engineered Carbons

Crown Electrokinetics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Crown Electrokinetics Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's forward-looking signals remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Orion Engineered Carbons

Risk-Adjusted Performance

4 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Orion Engineered Carbons are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Orion Engineered may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Crown Electrokinetics and Orion Engineered

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

The idea behind Crown Electrokinetics Corp and Orion Engineered Carbons 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.