Correlation Between Nike and Orgenesis

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

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

Diversification Opportunities for Nike and Orgenesis

-0.25

Correlation Coefficient

Nike  Orgenesis

Very good diversification

The 3 months correlation between Nike and Orgenesis is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Nike Inc and Orgenesis in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Orgenesis and Nike 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 Nike Inc are associated (or correlated) with Orgenesis. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Orgenesis has no effect on the direction of Nike i.e., Nike and Orgenesis go up and down completely randomly.

Pair Corralation between Nike and Orgenesis

Considering the 90-day investment horizon Nike Inc is expected to under-perform the Orgenesis. But the stock apears to be less risky and, when comparing its historical volatility, Nike Inc is 4.77 times less risky than Orgenesis. The stock trades about -0.04 of its potential returns per unit of risk. The Orgenesis is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  144.00  in Orgenesis on January 24, 2024 and sell it today you would lose (92.00) from holding Orgenesis or give up 63.89% of portfolio value over 90 days.

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

Nike Inc  vs.  Orgenesis

Nike Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nike Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound forward-looking signals, Nike is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Orgenesis

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Orgenesis are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak technical and fundamental indicators, Orgenesis unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Nike and Orgenesis

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

The idea behind Nike Inc and Orgenesis 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.