Correlation Between Orion Energy and Capstone Green

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Can any of the company-specific risk be diversified away by investing in both Orion Energy and Capstone Green 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 Energy and Capstone Green into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Orion Energy Systems and Capstone Green Energy, you can compare the effects of market volatilities on Orion Energy and Capstone Green 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 Energy with a short position of Capstone Green. Check out your portfolio center. Please also check ongoing floating volatility patterns of Orion Energy and Capstone Green.

Diversification Opportunities for Orion Energy and Capstone Green

  Correlation Coefficient

Very good diversification

The 3 months correlation between Orion and Capstone is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Orion Energy Systems and Capstone Green Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capstone Green Energy and Orion Energy 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 Energy Systems are associated (or correlated) with Capstone Green. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capstone Green Energy has no effect on the direction of Orion Energy i.e., Orion Energy and Capstone Green go up and down completely randomly.

Pair Corralation between Orion Energy and Capstone Green

Given the investment horizon of 90 days Orion Energy Systems is expected to generate 0.7 times more return on investment than Capstone Green. However, Orion Energy Systems is 1.43 times less risky than Capstone Green. It trades about 0.04 of its potential returns per unit of risk. Capstone Green Energy is currently generating about -0.22 per unit of risk. If you would invest  200.00  in Orion Energy Systems on January 1, 2023 and sell it today you would earn a total of  3.00  from holding Orion Energy Systems or generate 1.5% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
ValuesDaily Returns

Orion Energy Systems  vs.  Capstone Green Energy

 Performance (%) 
Orion Energy Systems 

Orion Performance

5 of 100

Compared to the overall equity markets, risk-adjusted returns on investments in Orion Energy Systems are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady basic indicators, Orion Energy showed solid returns over the last few months and may actually be approaching a breakup point.
Capstone Green Energy 

Capstone Performance

0 of 100

Over the last 90 days Capstone Green Energy has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Capstone Green is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the insiders.

Orion Energy and Capstone Green Volatility Contrast

   Predicted Return Density   

Pair Trading with Orion Energy and Capstone Green

The main advantage of trading using opposite Orion Energy and Capstone Green positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Orion Energy position performs unexpectedly, Capstone Green 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 Capstone Green will offset losses from the drop in Capstone Green's long position.
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The idea behind Orion Energy Systems and Capstone Green Energy 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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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 Probability Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.

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