Correlation Between Le Travenues and Orient Technologies

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

By analyzing existing cross correlation between Le Travenues Technology and Orient Technologies Limited, you can compare the effects of market volatilities on Le Travenues and Orient Technologies 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 Le Travenues with a short position of Orient Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Le Travenues and Orient Technologies.

Diversification Opportunities for Le Travenues and Orient Technologies

-0.42

Correlation Coefficient

Le Travenues  Orient Technologies

Very good diversification

The 3 months correlation between IXIGO and Orient is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Le Travenues Technology and Orient Technologies Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Orient Technologies and Le Travenues 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 Le Travenues Technology are associated (or correlated) with Orient Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Orient Technologies has no effect on the direction of Le Travenues i.e., Le Travenues and Orient Technologies go up and down completely randomly.

Pair Corralation between Le Travenues and Orient Technologies

Assuming the 90 days trading horizon Le Travenues Technology is expected to generate 0.68 times more return on investment than Orient Technologies. However, Le Travenues Technology is 1.48 times less risky than Orient Technologies. It trades about 0.1 of its potential returns per unit of risk. Orient Technologies Limited is currently generating about -0.06 per unit of risk. If you would invest  14,745  in Le Travenues Technology on September 16, 2024 and sell it today you would earn a total of  657.00  from holding Le Travenues Technology or generate 4.46% return on investment over 90 days.

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

Le Travenues Technology  vs.  Orient Technologies Limited

Le Travenues Technology

Risk-Adjusted Performance

0 of 100

Very Weak

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

Orient Technologies

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Orient Technologies Limited are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady technical and fundamental indicators, Orient Technologies unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Le Travenues and Orient Technologies

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

The idea behind Le Travenues Technology and Orient Technologies 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.

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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.