Correlation Between Orient Technologies and NRB Industrial

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

Diversification Opportunities for Orient Technologies and NRB Industrial

-0.59

Correlation Coefficient

Orient Technologies  NRB Industrial

Excellent diversification

The 3 months correlation between Orient and NRB is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Orient Technologies Limited and NRB Industrial Bearings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NRB Industrial Bearings 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 NRB Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NRB Industrial Bearings has no effect on the direction of Orient Technologies i.e., Orient Technologies and NRB Industrial go up and down completely randomly.

Pair Corralation between Orient Technologies and NRB Industrial

Assuming the 90 days trading horizon Orient Technologies Limited is expected to generate 1.32 times more return on investment than NRB Industrial. However, Orient Technologies is 1.32 times more volatile than NRB Industrial Bearings. It trades about 0.12 of its potential returns per unit of risk. NRB Industrial Bearings is currently generating about 0.03 per unit of risk. If you would invest  30,122  in Orient Technologies Limited on August 31, 2024 and sell it today you would earn a total of  9,723  from holding Orient Technologies Limited or generate 32.28% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	14.07%
Values	Daily Returns

Orient Technologies Limited  vs.  NRB Industrial Bearings

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.

NRB Industrial Bearings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NRB Industrial Bearings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in December 2024. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Orient Technologies and NRB Industrial

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

The idea behind Orient Technologies Limited and NRB Industrial Bearings 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.