Correlation Between Resource Base and Orora

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

By analyzing existing cross correlation between Resource Base and Orora, you can compare the effects of market volatilities on Resource Base and Orora 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 Resource Base with a short position of Orora. Check out your portfolio center. Please also check ongoing floating volatility patterns of Resource Base and Orora.

Diversification Opportunities for Resource Base and Orora

0.05

Correlation Coefficient

Resource Base  Orora

Significant diversification

The 3 months correlation between Resource and Orora is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Resource Base and Orora in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Orora and Resource Base 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 Resource Base are associated (or correlated) with Orora. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Orora has no effect on the direction of Resource Base i.e., Resource Base and Orora go up and down completely randomly.

Pair Corralation between Resource Base and Orora

Assuming the 90 days trading horizon Resource Base is expected to generate 1.59 times more return on investment than Orora. However, Resource Base is 1.59 times more volatile than Orora. It trades about -0.03 of its potential returns per unit of risk. Orora is currently generating about -0.23 per unit of risk. If you would invest  3.60  in Resource Base on December 30, 2024 and sell it today you would lose (0.30) from holding Resource Base or give up 8.33% of portfolio value over 90 days.

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

Resource Base  vs.  Orora

Resource Base

Risk-Adjusted Performance

Very Weak

Over the last 90 days Resource Base has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Resource Base is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Orora

Risk-Adjusted Performance

Very Weak

Over the last 90 days Orora has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Resource Base and Orora

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

The idea behind Resource Base and Orora 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 Anywhere module to track or share privately all of your investments from the convenience of any device.