Correlation Between Indo Borax and Ortel Communications

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

By analyzing existing cross correlation between Indo Borax Chemicals and Ortel Communications Limited, you can compare the effects of market volatilities on Indo Borax and Ortel Communications 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 Indo Borax with a short position of Ortel Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of Indo Borax and Ortel Communications.

Diversification Opportunities for Indo Borax and Ortel Communications

0.81

Correlation Coefficient

Indo Borax  Ortel Communications

Very poor diversification

The 3 months correlation between Indo and Ortel is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Indo Borax Chemicals and Ortel Communications Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ortel Communications and Indo Borax 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 Indo Borax Chemicals are associated (or correlated) with Ortel Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ortel Communications has no effect on the direction of Indo Borax i.e., Indo Borax and Ortel Communications go up and down completely randomly.

Pair Corralation between Indo Borax and Ortel Communications

Assuming the 90 days trading horizon Indo Borax Chemicals is expected to under-perform the Ortel Communications. But the stock apears to be less risky and, when comparing its historical volatility, Indo Borax Chemicals is 1.11 times less risky than Ortel Communications. The stock trades about -0.14 of its potential returns per unit of risk. The Ortel Communications Limited is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  184.00  in Ortel Communications Limited on December 1, 2024 and sell it today you would lose (5.00) from holding Ortel Communications Limited or give up 2.72% of portfolio value over 90 days.

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

Indo Borax Chemicals  vs.  Ortel Communications Limited

Indo Borax Chemicals

Risk-Adjusted Performance

Very Weak

Over the last 90 days Indo Borax Chemicals has generated negative risk-adjusted returns adding no value to investors with long positions. Even with unsteady performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in April 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Ortel Communications

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ortel Communications Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Ortel Communications is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Indo Borax and Ortel Communications

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

The idea behind Indo Borax Chemicals and Ortel Communications Limited 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.