Correlation Between Shikun Binui and Oron Group

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

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

Diversification Opportunities for Shikun Binui and Oron Group

0.83

Correlation Coefficient

Shikun Binui  Oron Group

Very poor diversification

The 3 months correlation between Shikun and Oron is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Shikun Binui and Oron Group Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oron Group Investments and Shikun Binui 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 Shikun Binui are associated (or correlated) with Oron Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oron Group Investments has no effect on the direction of Shikun Binui i.e., Shikun Binui and Oron Group go up and down completely randomly.

Pair Corralation between Shikun Binui and Oron Group

Assuming the 90 days trading horizon Shikun Binui is expected to generate 1.26 times more return on investment than Oron Group. However, Shikun Binui is 1.26 times more volatile than Oron Group Investments. It trades about 0.24 of its potential returns per unit of risk. Oron Group Investments is currently generating about 0.17 per unit of risk. If you would invest  89,730  in Shikun Binui on September 3, 2024 and sell it today you would earn a total of  29,070  from holding Shikun Binui or generate 32.4% return on investment over 90 days.

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

Shikun Binui  vs.  Oron Group Investments

Shikun Binui

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Shikun Binui are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Shikun Binui sustained solid returns over the last few months and may actually be approaching a breakup point.

Oron Group Investments

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Oron Group Investments are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Oron Group sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Shikun Binui and Oron Group

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

The idea behind Shikun Binui and Oron Group Investments 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.

Check out your portfolio center.

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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.