Correlation Between Orient Technologies and AAA Technologies

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

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

Diversification Opportunities for Orient Technologies and AAA Technologies

-0.63

Correlation Coefficient

Orient Technologies  AAA Technologies

Excellent diversification

The 3 months correlation between Orient and AAA is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Orient Technologies Limited and AAA Technologies Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AAA Technologies and Orient Technologies 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 Technologies Limited are associated (or correlated) with AAA Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AAA Technologies has no effect on the direction of Orient Technologies i.e., Orient Technologies and AAA Technologies go up and down completely randomly.

Pair Corralation between Orient Technologies and AAA Technologies

Assuming the 90 days trading horizon Orient Technologies Limited is expected to generate 1.27 times more return on investment than AAA Technologies. However, Orient Technologies is 1.27 times more volatile than AAA Technologies Limited. It trades about 0.11 of its potential returns per unit of risk. AAA Technologies Limited is currently generating about -0.01 per unit of risk. If you would invest  31,671  in Orient Technologies Limited on August 31, 2024 and sell it today you would earn a total of  8,504  from holding Orient Technologies Limited or generate 26.85% return on investment over 90 days.

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

Orient Technologies Limited  vs.  AAA Technologies Limited

Orient Technologies

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Orient Technologies Limited are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady technical and fundamental indicators, Orient Technologies unveiled solid returns over the last few months and may actually be approaching a breakup point.

AAA Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AAA Technologies Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong technical and fundamental indicators, AAA Technologies is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Orient Technologies and AAA Technologies

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

The idea behind Orient Technologies Limited and AAA Technologies Limited 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.