Correlation Between Orient Overseas and DAmico International

Can any of the company-specific risk be diversified away by investing in both Orient Overseas and DAmico International 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 Overseas and DAmico International into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Orient Overseas Limited and dAmico International Shipping, you can compare the effects of market volatilities on Orient Overseas and DAmico International 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 Overseas with a short position of DAmico International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Orient Overseas and DAmico International.

Diversification Opportunities for Orient Overseas and DAmico International

0.71

Correlation Coefficient

Orient Overseas  DAmico International

Poor diversification

The 3 months correlation between Orient and DAmico is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Orient Overseas Limited and dAmico International Shipping in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on dAmico International and Orient Overseas 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 Overseas Limited are associated (or correlated) with DAmico International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of dAmico International has no effect on the direction of Orient Overseas i.e., Orient Overseas and DAmico International go up and down completely randomly.

Pair Corralation between Orient Overseas and DAmico International

Assuming the 90 days horizon Orient Overseas Limited is expected to generate 0.52 times more return on investment than DAmico International. However, Orient Overseas Limited is 1.91 times less risky than DAmico International. It trades about -0.17 of its potential returns per unit of risk. dAmico International Shipping is currently generating about -0.26 per unit of risk. If you would invest  1,370  in Orient Overseas Limited on September 23, 2024 and sell it today you would lose (125.00) from holding Orient Overseas Limited or give up 9.12% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	97.73%
Values	Daily Returns

Orient Overseas Limited  vs.  dAmico International Shipping

Orient Overseas

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Orient Overseas Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unfluctuating performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

dAmico International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days dAmico International Shipping has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Orient Overseas and DAmico International

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

The idea behind Orient Overseas Limited and dAmico International Shipping 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..