Correlation Between Orient Technologies and Investment Trust

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

Diversification Opportunities for Orient Technologies and Investment Trust

-0.45

Correlation Coefficient

Orient Technologies  Investment Trust

Very good diversification

The 3 months correlation between Orient and Investment is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Orient Technologies Limited and The Investment Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Investment Trust 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 Investment Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Investment Trust has no effect on the direction of Orient Technologies i.e., Orient Technologies and Investment Trust go up and down completely randomly.

Pair Corralation between Orient Technologies and Investment Trust

Assuming the 90 days trading horizon Orient Technologies Limited is expected to generate 1.69 times more return on investment than Investment Trust. However, Orient Technologies is 1.69 times more volatile than The Investment Trust. It trades about 0.3 of its potential returns per unit of risk. The Investment Trust is currently generating about -0.06 per unit of risk. If you would invest  27,084  in Orient Technologies Limited on October 13, 2024 and sell it today you would earn a total of  32,691  from holding Orient Technologies Limited or generate 120.7% return on investment over 90 days.

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

Orient Technologies Limited  vs.  The Investment Trust

Orient Technologies

Risk-Adjusted Performance

23 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Orient Technologies Limited are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively abnormal technical and fundamental indicators, Orient Technologies unveiled solid returns over the last few months and may actually be approaching a breakup point.

Investment Trust

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days The Investment Trust has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak 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 Investment Trust

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

The idea behind Orient Technologies Limited and The Investment Trust 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.