Correlation Between Orient Technologies and MRF

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

Diversification Opportunities for Orient Technologies and MRF

-0.05

Correlation Coefficient

Orient Technologies  MRF

Good diversification

The 3 months correlation between Orient and MRF is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Orient Technologies Limited and MRF Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MRF Limited 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 MRF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MRF Limited has no effect on the direction of Orient Technologies i.e., Orient Technologies and MRF go up and down completely randomly.

Pair Corralation between Orient Technologies and MRF

Assuming the 90 days trading horizon Orient Technologies Limited is expected to generate 3.21 times more return on investment than MRF. However, Orient Technologies is 3.21 times more volatile than MRF Limited. It trades about 0.18 of its potential returns per unit of risk. MRF Limited is currently generating about -0.02 per unit of risk. If you would invest  30,122  in Orient Technologies Limited on October 8, 2024 and sell it today you would earn a total of  23,623  from holding Orient Technologies Limited or generate 78.42% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	48.91%
Values	Daily Returns

Orient Technologies Limited  vs.  MRF Limited

Orient Technologies

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Orient Technologies Limited are ranked lower than 22 (%) 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.

MRF Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MRF Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Orient Technologies and MRF

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

The idea behind Orient Technologies Limited and MRF 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.