Correlation Between Koppers Holdings and Orion Engineered

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

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

Diversification Opportunities for Koppers Holdings and Orion Engineered

0.93

Correlation Coefficient

Koppers Holdings  Orion Engineered

Almost no diversification

The 3 months correlation between Koppers and Orion is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Koppers Holdings 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 Koppers Holdings 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 Koppers Holdings 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 Koppers Holdings i.e., Koppers Holdings and Orion Engineered go up and down completely randomly.

Pair Corralation between Koppers Holdings and Orion Engineered

Considering the 90-day investment horizon Koppers Holdings is expected to generate 0.83 times more return on investment than Orion Engineered. However, Koppers Holdings is 1.21 times less risky than Orion Engineered. It trades about -0.15 of its potential returns per unit of risk. Orion Engineered Carbons is currently generating about -0.18 per unit of risk. If you would invest  3,846  in Koppers Holdings on November 29, 2024 and sell it today you would lose (619.00) from holding Koppers Holdings or give up 16.09% of portfolio value over 90 days.

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

Koppers Holdings  vs.  Orion Engineered Carbons

Koppers Holdings

Risk-Adjusted Performance

Very Weak

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

Orion Engineered Carbons

Risk-Adjusted Performance

Very Weak

Over the last 90 days Orion Engineered Carbons has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in March 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Koppers Holdings and Orion Engineered

The main advantage of trading using opposite Koppers Holdings and Orion Engineered positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Koppers Holdings 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 Koppers Holdings 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.