Correlation Between Orion Engineered and H B

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

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

Diversification Opportunities for Orion Engineered and H B

0.22

Correlation Coefficient

Orion Engineered  H B

Modest diversification

The 3 months correlation between Orion and FUL is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Orion Engineered Carbons and H B Fuller in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on H B Fuller and Orion Engineered 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 Orion Engineered Carbons are associated (or correlated) with H B. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of H B Fuller has no effect on the direction of Orion Engineered i.e., Orion Engineered and H B go up and down completely randomly.

Pair Corralation between Orion Engineered and H B

Considering the 90-day investment horizon Orion Engineered Carbons is expected to under-perform the H B. In addition to that, Orion Engineered is 1.19 times more volatile than H B Fuller. It trades about -0.21 of its total potential returns per unit of risk. H B Fuller is currently generating about -0.18 per unit of volatility. If you would invest  7,962  in H B Fuller on March 11, 2024 and sell it today you would lose (355.00) from holding H B Fuller or give up 4.46% of portfolio value over 90 days.

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

Orion Engineered Carbons  vs.  H B Fuller

Orion Engineered Carbons

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Orion Engineered Carbons are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Orion Engineered is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

H B Fuller

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days H B Fuller has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, H B is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Orion Engineered and H B

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

The idea behind Orion Engineered Carbons and H B Fuller 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.