Correlation Between Orient Overseas and Materialise

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

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

Diversification Opportunities for Orient Overseas and Materialise

-0.02

Correlation Coefficient

Orient Overseas  Materialise

Good diversification

The 3 months correlation between Orient and Materialise is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Orient Overseas Limited and Materialise NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Materialise NV and Orient Overseas 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 Orient Overseas Limited are associated (or correlated) with Materialise. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Materialise NV has no effect on the direction of Orient Overseas i.e., Orient Overseas and Materialise go up and down completely randomly.

Pair Corralation between Orient Overseas and Materialise

Assuming the 90 days trading horizon Orient Overseas Limited is expected to generate 1.39 times more return on investment than Materialise. However, Orient Overseas is 1.39 times more volatile than Materialise NV. It trades about 0.05 of its potential returns per unit of risk. Materialise NV is currently generating about 0.01 per unit of risk. If you would invest  766.00  in Orient Overseas Limited on October 5, 2024 and sell it today you would earn a total of  640.00  from holding Orient Overseas Limited or generate 83.55% return on investment over 90 days.

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

Orient Overseas Limited  vs.  Materialise NV

Orient Overseas

Risk-Adjusted Performance

0 of 100

Modest

Over the last 90 days Orient Overseas Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly fragile forward indicators, Orient Overseas may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Materialise NV

Risk-Adjusted Performance

0 of 100

Good

Over the last 90 days Materialise NV has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively fragile basic indicators, Materialise unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Orient Overseas and Materialise

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

The idea behind Orient Overseas Limited and Materialise NV 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.