Correlation Between Orion Oyj and Oriola KD

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

By analyzing existing cross correlation between Orion Oyj A and Oriola KD Oyj B, you can compare the effects of market volatilities on Orion Oyj and Oriola KD 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 Orion Oyj with a short position of Oriola KD. Check out your portfolio center. Please also check ongoing floating volatility patterns of Orion Oyj and Oriola KD.

Diversification Opportunities for Orion Oyj and Oriola KD

0.67

Correlation Coefficient

Orion Oyj  Oriola KD

Poor diversification

The 3 months correlation between Orion and Oriola is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Orion Oyj A and Oriola KD Oyj B in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oriola KD Oyj and Orion Oyj 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 Orion Oyj A are associated (or correlated) with Oriola KD. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oriola KD Oyj has no effect on the direction of Orion Oyj i.e., Orion Oyj and Oriola KD go up and down completely randomly.

Pair Corralation between Orion Oyj and Oriola KD

Assuming the 90 days trading horizon Orion Oyj A is expected to generate 1.13 times more return on investment than Oriola KD. However, Orion Oyj is 1.13 times more volatile than Oriola KD Oyj B. It trades about 0.27 of its potential returns per unit of risk. Oriola KD Oyj B is currently generating about 0.23 per unit of risk. If you would invest  4,220  in Orion Oyj A on December 23, 2024 and sell it today you would earn a total of  1,470  from holding Orion Oyj A or generate 34.83% return on investment over 90 days.

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

Orion Oyj A  vs.  Oriola KD Oyj B

Orion Oyj A

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Orion Oyj A are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent technical indicators, Orion Oyj demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Oriola KD Oyj

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Oriola KD Oyj B are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak technical indicators, Oriola KD demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Orion Oyj and Oriola KD

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

The idea behind Orion Oyj A and Oriola KD Oyj B 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.