Correlation Between Morgan Advanced and Orchestra BioMed

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

By analyzing existing cross correlation between Morgan Advanced Materials and Orchestra BioMed Holdings, you can compare the effects of market volatilities on Morgan Advanced and Orchestra BioMed 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 Morgan Advanced with a short position of Orchestra BioMed. Check out your portfolio center. Please also check ongoing floating volatility patterns of Morgan Advanced and Orchestra BioMed.

Diversification Opportunities for Morgan Advanced and Orchestra BioMed

-0.09

Correlation Coefficient

Morgan Advanced  Orchestra BioMed

Good diversification

The 3 months correlation between Morgan and Orchestra is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Morgan Advanced Materials and Orchestra BioMed Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Orchestra BioMed Holdings and Morgan Advanced 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 Morgan Advanced Materials are associated (or correlated) with Orchestra BioMed. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Orchestra BioMed Holdings has no effect on the direction of Morgan Advanced i.e., Morgan Advanced and Orchestra BioMed go up and down completely randomly.

Pair Corralation between Morgan Advanced and Orchestra BioMed

Assuming the 90 days horizon Morgan Advanced Materials is expected to under-perform the Orchestra BioMed. But the pink sheet apears to be less risky and, when comparing its historical volatility, Morgan Advanced Materials is 5.18 times less risky than Orchestra BioMed. The pink sheet trades about -0.22 of its potential returns per unit of risk. The Orchestra BioMed Holdings is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  551.00  in Orchestra BioMed Holdings on October 10, 2024 and sell it today you would lose (14.00) from holding Orchestra BioMed Holdings or give up 2.54% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.24%
Values	Daily Returns

Morgan Advanced Materials  vs.  Orchestra BioMed Holdings

Morgan Advanced Materials

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Morgan Advanced Materials has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Orchestra BioMed Holdings

Risk-Adjusted Performance

4 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Orchestra BioMed Holdings are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very fragile forward indicators, Orchestra BioMed displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Morgan Advanced and Orchestra BioMed

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

The idea behind Morgan Advanced Materials and Orchestra BioMed Holdings 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.