Correlation Between Orion Engineered and G6 Materials

Can any of the company-specific risk be diversified away by investing in both Orion Engineered and G6 Materials 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 Orion Engineered and G6 Materials into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Orion Engineered Carbons and G6 Materials Corp, you can compare the effects of market volatilities on Orion Engineered and G6 Materials 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 Orion Engineered with a short position of G6 Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of Orion Engineered and G6 Materials.

Diversification Opportunities for Orion Engineered and G6 Materials

-0.41

Correlation Coefficient

Orion Engineered  G6 Materials

Very good diversification

The 3 months correlation between Orion and GPHBF is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Orion Engineered Carbons and G6 Materials Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on G6 Materials Corp and Orion Engineered 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 Orion Engineered Carbons are associated (or correlated) with G6 Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of G6 Materials Corp has no effect on the direction of Orion Engineered i.e., Orion Engineered and G6 Materials go up and down completely randomly.

Pair Corralation between Orion Engineered and G6 Materials

Considering the 90-day investment horizon Orion Engineered Carbons is expected to under-perform the G6 Materials. But the stock apears to be less risky and, when comparing its historical volatility, Orion Engineered Carbons is 9.24 times less risky than G6 Materials. The stock trades about -0.1 of its potential returns per unit of risk. The G6 Materials Corp is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest  4.30  in G6 Materials Corp on December 27, 2024 and sell it today you would earn a total of  14.70  from holding G6 Materials Corp or generate 341.86% return on investment over 90 days.

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

Orion Engineered Carbons  vs.  G6 Materials Corp

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 April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

G6 Materials Corp

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in G6 Materials Corp are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile fundamental drivers, G6 Materials reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Orion Engineered and G6 Materials

The main advantage of trading using opposite Orion Engineered and G6 Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Orion Engineered position performs unexpectedly, G6 Materials 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 G6 Materials will offset losses from the drop in G6 Materials' long position.

The idea behind Orion Engineered Carbons and G6 Materials Corp 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.

Check out your portfolio center.

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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.