Correlation Between Orica and Nanophase Technol

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

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

Diversification Opportunities for Orica and Nanophase Technol

0.0

Correlation Coefficient

Orica  Nanophase Technol

Pay attention - limited upside

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

Pair Corralation between Orica and Nanophase Technol

If you would invest  968.00  in Orica Limited on December 29, 2024 and sell it today you would earn a total of  132.00  from holding Orica Limited or generate 13.64% return on investment over 90 days.

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

Orica Limited  vs.  Nanophase Technol

Orica Limited

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Orica Limited are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak fundamental indicators, Orica reported solid returns over the last few months and may actually be approaching a breakup point.

Nanophase Technol

Risk-Adjusted Performance

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.

Pair Trading with Orica and Nanophase Technol

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

The idea behind Orica Limited and Nanophase Technol 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.