Correlation Between Orient Technologies and Edelweiss Financial

Can any of the company-specific risk be diversified away by investing in both Orient Technologies and Edelweiss Financial 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 Edelweiss Financial 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 Edelweiss Financial Services, you can compare the effects of market volatilities on Orient Technologies and Edelweiss Financial 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 Edelweiss Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Orient Technologies and Edelweiss Financial.

Diversification Opportunities for Orient Technologies and Edelweiss Financial

-0.16

Correlation Coefficient

Orient Technologies  Edelweiss Financial

Good diversification

The 3 months correlation between Orient and Edelweiss is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Orient Technologies Limited and Edelweiss Financial Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Edelweiss Financial 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 Edelweiss Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Edelweiss Financial has no effect on the direction of Orient Technologies i.e., Orient Technologies and Edelweiss Financial go up and down completely randomly.

Pair Corralation between Orient Technologies and Edelweiss Financial

Assuming the 90 days trading horizon Orient Technologies Limited is expected to generate 1.18 times more return on investment than Edelweiss Financial. However, Orient Technologies is 1.18 times more volatile than Edelweiss Financial Services. It trades about 0.15 of its potential returns per unit of risk. Edelweiss Financial Services is currently generating about 0.08 per unit of risk. If you would invest  30,122  in Orient Technologies Limited on September 20, 2024 and sell it today you would earn a total of  15,433  from holding Orient Technologies Limited or generate 51.23% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	32.51%
Values	Daily Returns

Orient Technologies Limited  vs.  Edelweiss Financial Services

Orient Technologies

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Orient Technologies Limited are ranked lower than 13 (%) 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.

Edelweiss Financial

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Edelweiss Financial Services are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong forward indicators, Edelweiss Financial is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Orient Technologies and Edelweiss Financial

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

The idea behind Orient Technologies Limited and Edelweiss Financial Services 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.