Correlation Between Baran and Oron Group
Can any of the company-specific risk be diversified away by investing in both Baran 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 Baran and Oron Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Baran Group and Oron Group Investments, you can compare the effects of market volatilities on Baran 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 Baran with a short position of Oron Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Baran and Oron Group.
Diversification Opportunities for Baran and Oron Group
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Baran and Oron is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Baran Group 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 Baran 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 Baran Group 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 Baran i.e., Baran and Oron Group go up and down completely randomly.
Pair Corralation between Baran and Oron Group
Assuming the 90 days trading horizon Baran Group is expected to generate 1.29 times more return on investment than Oron Group. However, Baran is 1.29 times more volatile than Oron Group Investments. It trades about 0.12 of its potential returns per unit of risk. Oron Group Investments is currently generating about -0.22 per unit of risk. If you would invest 105,900 in Baran Group on January 24, 2024 and sell it today you would earn a total of 4,400 from holding Baran Group or generate 4.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Baran Group vs. Oron Group Investments
Performance |
| Timeline |
| Baran Group |
| Oron Group Investments |
Baran and Oron Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Baran and Oron Group
The main advantage of trading using opposite Baran and Oron Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Baran 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 Baran Group 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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