Correlation Between Trinseo SA and Orion Engineered

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

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

Diversification Opportunities for Trinseo SA and Orion Engineered

-0.17

Correlation Coefficient

Trinseo SA  Orion Engineered

Good diversification

The 3 months correlation between Trinseo and Orion is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Trinseo SA and Orion Engineered Carbons in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Orion Engineered Carbons and Trinseo SA 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 Trinseo SA are associated (or correlated) with Orion Engineered. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Orion Engineered Carbons has no effect on the direction of Trinseo SA i.e., Trinseo SA and Orion Engineered go up and down completely randomly.

Pair Corralation between Trinseo SA and Orion Engineered

Considering the 90-day investment horizon Trinseo SA is expected to generate 2.13 times more return on investment than Orion Engineered. However, Trinseo SA is 2.13 times more volatile than Orion Engineered Carbons. It trades about 0.1 of its potential returns per unit of risk. Orion Engineered Carbons is currently generating about -0.06 per unit of risk. If you would invest  251.00  in Trinseo SA on September 23, 2024 and sell it today you would earn a total of  226.00  from holding Trinseo SA or generate 90.04% return on investment over 90 days.

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

Trinseo SA  vs.  Orion Engineered Carbons

Trinseo SA

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Trinseo SA are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile basic indicators, Trinseo SA exhibited solid returns over the last few months and may actually be approaching a breakup point.

Orion Engineered Carbons

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Orion Engineered Carbons has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Orion Engineered is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Trinseo SA and Orion Engineered

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

The idea behind Trinseo SA and Orion Engineered Carbons 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.