Correlation Between Oriental Precision and MITECH CoLtd
Can any of the company-specific risk be diversified away by investing in both Oriental Precision and MITECH CoLtd 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 Oriental Precision and MITECH CoLtd into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Oriental Precision Engineering and MITECH CoLtd, you can compare the effects of market volatilities on Oriental Precision and MITECH CoLtd 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 Oriental Precision with a short position of MITECH CoLtd. Check out your portfolio center. Please also check ongoing floating volatility patterns of Oriental Precision and MITECH CoLtd.
Diversification Opportunities for Oriental Precision and MITECH CoLtd
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Oriental and MITECH is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Oriental Precision Engineering and MITECH CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MITECH CoLtd and Oriental Precision 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 Oriental Precision Engineering are associated (or correlated) with MITECH CoLtd. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MITECH CoLtd has no effect on the direction of Oriental Precision i.e., Oriental Precision and MITECH CoLtd go up and down completely randomly.
Pair Corralation between Oriental Precision and MITECH CoLtd
Assuming the 90 days trading horizon Oriental Precision Engineering is expected to generate 1.63 times more return on investment than MITECH CoLtd. However, Oriental Precision is 1.63 times more volatile than MITECH CoLtd. It trades about 0.11 of its potential returns per unit of risk. MITECH CoLtd is currently generating about 0.06 per unit of risk. If you would invest 418,000 in Oriental Precision Engineering on September 23, 2024 and sell it today you would earn a total of 108,000 from holding Oriental Precision Engineering or generate 25.84% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Oriental Precision Engineering vs. MITECH CoLtd
Performance |
Timeline |
Oriental Precision |
MITECH CoLtd |
Oriental Precision and MITECH CoLtd Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Oriental Precision and MITECH CoLtd
The main advantage of trading using opposite Oriental Precision and MITECH CoLtd positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Oriental Precision position performs unexpectedly, MITECH CoLtd 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 MITECH CoLtd will offset losses from the drop in MITECH CoLtd's long position.Oriental Precision vs. Nasmedia Co | Oriental Precision vs. Cube Entertainment | Oriental Precision vs. TJ media Co | Oriental Precision vs. Daelim Industrial Co |
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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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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