Correlation Between Orion Energy and International Business
Can any of the company-specific risk be diversified away by investing in both Orion Energy and International Business 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 International Business 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 International Business Machines, you can compare the effects of market volatilities on Orion Energy and International Business 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 International Business. Check out your portfolio center. Please also check ongoing floating volatility patterns of Orion Energy and International Business.
Diversification Opportunities for Orion Energy and International Business
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Orion and International is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Orion Energy Systems and International Business Machine in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Business 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 International Business. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International Business has no effect on the direction of Orion Energy i.e., Orion Energy and International Business go up and down completely randomly.
Pair Corralation between Orion Energy and International Business
Given the investment horizon of 90 days Orion Energy Systems is expected to generate 2.21 times more return on investment than International Business. However, Orion Energy is 2.21 times more volatile than International Business Machines. It trades about -0.07 of its potential returns per unit of risk. International Business Machines is currently generating about -0.34 per unit of risk. If you would invest 90.00 in Orion Energy Systems on January 20, 2024 and sell it today you would lose (3.00) from holding Orion Energy Systems or give up 3.33% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 95.45% |
Values | Daily Returns |
Orion Energy Systems vs. International Business Machine
Performance |
Timeline |
Orion Energy Systems |
International Business |
Orion Energy and International Business Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Orion Energy and International Business
The main advantage of trading using opposite Orion Energy and International Business positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Orion Energy position performs unexpectedly, International Business 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 International Business will offset losses from the drop in International Business' long position.Orion Energy vs. Bloom Energy Corp | Orion Energy vs. Microvast Holdings | Orion Energy vs. Solid Power | Orion Energy vs. FREYR Battery SA |
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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 the Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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