Correlation Between Orbit Garant and Kiplin Metals

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

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

Diversification Opportunities for Orbit Garant and Kiplin Metals

0.79

Correlation Coefficient

Orbit Garant  Kiplin Metals

Poor diversification

The 3 months correlation between Orbit and Kiplin is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Orbit Garant Drilling and Kiplin Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kiplin Metals and Orbit Garant 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 Orbit Garant Drilling are associated (or correlated) with Kiplin Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kiplin Metals has no effect on the direction of Orbit Garant i.e., Orbit Garant and Kiplin Metals go up and down completely randomly.

Pair Corralation between Orbit Garant and Kiplin Metals

Assuming the 90 days trading horizon Orbit Garant is expected to generate 1.54 times less return on investment than Kiplin Metals. But when comparing it to its historical volatility, Orbit Garant Drilling is 2.69 times less risky than Kiplin Metals. It trades about 0.13 of its potential returns per unit of risk. Kiplin Metals is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  26.00  in Kiplin Metals on December 1, 2024 and sell it today you would earn a total of  5.00  from holding Kiplin Metals or generate 19.23% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Orbit Garant Drilling  vs.  Kiplin Metals

Orbit Garant Drilling

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Orbit Garant Drilling are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating fundamental indicators, Orbit Garant displayed solid returns over the last few months and may actually be approaching a breakup point.

Kiplin Metals

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Kiplin Metals are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Kiplin Metals showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Orbit Garant and Kiplin Metals

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

The idea behind Orbit Garant Drilling and Kiplin Metals 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.