Correlation Between Orient Overseas and Pyxis Tankers

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

Diversification Opportunities for Orient Overseas and Pyxis Tankers

-0.64

Correlation Coefficient

Orient Overseas  Pyxis Tankers

Excellent diversification

The 3 months correlation between Orient and Pyxis is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Orient Overseas Limited and Pyxis Tankers in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pyxis Tankers 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 Pyxis Tankers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pyxis Tankers has no effect on the direction of Orient Overseas i.e., Orient Overseas and Pyxis Tankers go up and down completely randomly.

Pair Corralation between Orient Overseas and Pyxis Tankers

Assuming the 90 days horizon Orient Overseas Limited is expected to generate 12.67 times more return on investment than Pyxis Tankers. However, Orient Overseas is 12.67 times more volatile than Pyxis Tankers. It trades about 0.06 of its potential returns per unit of risk. Pyxis Tankers is currently generating about 0.04 per unit of risk. If you would invest  1,741  in Orient Overseas Limited on September 24, 2024 and sell it today you would lose (496.00) from holding Orient Overseas Limited or give up 28.49% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	74.89%
Values	Daily Returns

Orient Overseas Limited  vs.  Pyxis Tankers

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 fragile 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.

Pyxis Tankers

Risk-Adjusted Performance

0 of 100

Modest

Over the last 90 days Pyxis Tankers has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Pyxis Tankers is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Orient Overseas and Pyxis Tankers

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

The idea behind Orient Overseas Limited and Pyxis Tankers 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.