Correlation Between Nanophase Technol and Orica

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

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

Diversification Opportunities for Nanophase Technol and Orica

-0.71

Correlation Coefficient

Nanophase Technol  Orica

Pay attention - limited upside

The 3 months correlation between Nanophase and Orica is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Nanophase Technol and Orica Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Orica Limited and Nanophase Technol 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 Nanophase Technol are associated (or correlated) with Orica. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Orica Limited has no effect on the direction of Nanophase Technol i.e., Nanophase Technol and Orica go up and down completely randomly.

Pair Corralation between Nanophase Technol and Orica

If you would invest  140.00  in Nanophase Technol on September 3, 2024 and sell it today you would earn a total of  0.00  from holding Nanophase Technol or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	1.56%
Values	Daily Returns

Nanophase Technol  vs.  Orica Limited

Nanophase Technol

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nanophase Technol has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Nanophase Technol is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Orica Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Orica Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable fundamental indicators, Orica is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Nanophase Technol and Orica

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

The idea behind Nanophase Technol and Orica 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.