Correlation Between Orion Energy and Iren SpA

Can any of the company-specific risk be diversified away by investing in both Orion Energy and Iren SpA 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 Iren SpA 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 Iren SpA, you can compare the effects of market volatilities on Orion Energy and Iren SpA 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 Iren SpA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Orion Energy and Iren SpA.

Diversification Opportunities for Orion Energy and Iren SpA

0.79

Correlation Coefficient

Orion Energy  Iren SpA

Poor diversification

The 3 months correlation between Orion and Iren is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Orion Energy Systems and Iren SpA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Iren SpA 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 Iren SpA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Iren SpA has no effect on the direction of Orion Energy i.e., Orion Energy and Iren SpA go up and down completely randomly.

Pair Corralation between Orion Energy and Iren SpA

Given the investment horizon of 90 days Orion Energy Systems is expected to under-perform the Iren SpA. In addition to that, Orion Energy is 2.65 times more volatile than Iren SpA. It trades about -0.05 of its total potential returns per unit of risk. Iren SpA is currently generating about 0.0 per unit of volatility. If you would invest  192.00  in Iren SpA on January 17, 2024 and sell it today you would lose (7.00) from holding Iren SpA or give up 3.65% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	89.88%
Values	Daily Returns

Orion Energy Systems  vs.  Iren SpA

Orion Energy Systems

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Orion Energy Systems has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in May 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Iren SpA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Iren SpA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's technical and fundamental indicators remain nearly stable which may send shares a bit higher in May 2024. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Orion Energy and Iren SpA

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

The idea behind Orion Energy Systems and Iren SpA 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.