Correlation Between Nortech Systems and Orbit International

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

By analyzing existing cross correlation between Nortech Systems Incorporated and Orbit International, you can compare the effects of market volatilities on Nortech Systems and Orbit International 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 Nortech Systems with a short position of Orbit International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nortech Systems and Orbit International.

Diversification Opportunities for Nortech Systems and Orbit International

0.0

Correlation Coefficient

Nortech Systems  Orbit International

Pay attention - limited upside

The 3 months correlation between Nortech and Orbit is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Nortech Systems Incorporated and Orbit International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Orbit International and Nortech Systems 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 Nortech Systems Incorporated are associated (or correlated) with Orbit International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Orbit International has no effect on the direction of Nortech Systems i.e., Nortech Systems and Orbit International go up and down completely randomly.

Pair Corralation between Nortech Systems and Orbit International

If you would invest (100.00) in Orbit International on December 4, 2024 and sell it today you would earn a total of  100.00  from holding Orbit International or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Nortech Systems Incorporated  vs.  Orbit International

Nortech Systems

Risk-Adjusted Performance

Very Weak

Over the last 90 days Nortech Systems Incorporated has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Orbit International

Risk-Adjusted Performance

Very Weak

Over the last 90 days Orbit International has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable fundamental drivers, Orbit International is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Nortech Systems and Orbit International

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

The idea behind Nortech Systems Incorporated and Orbit International 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 Global Correlations module to find global opportunities by holding instruments from different markets.