Correlation Between Orbitech and Namhae Chemical

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

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

Diversification Opportunities for Orbitech and Namhae Chemical

0.55

Correlation Coefficient

Orbitech  Namhae Chemical

Very weak diversification

The 3 months correlation between Orbitech and Namhae is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Orbitech Co and Namhae Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Namhae Chemical and Orbitech 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 Orbitech Co are associated (or correlated) with Namhae Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Namhae Chemical has no effect on the direction of Orbitech i.e., Orbitech and Namhae Chemical go up and down completely randomly.

Pair Corralation between Orbitech and Namhae Chemical

Assuming the 90 days trading horizon Orbitech Co is expected to under-perform the Namhae Chemical. In addition to that, Orbitech is 2.82 times more volatile than Namhae Chemical. It trades about -0.12 of its total potential returns per unit of risk. Namhae Chemical is currently generating about -0.01 per unit of volatility. If you would invest  644,000  in Namhae Chemical on September 14, 2024 and sell it today you would lose (7,000) from holding Namhae Chemical or give up 1.09% of portfolio value over 90 days.

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

Orbitech Co  vs.  Namhae Chemical

Orbitech

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Orbitech Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Namhae Chemical

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Namhae Chemical has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Namhae Chemical is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Orbitech and Namhae Chemical

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

The idea behind Orbitech Co and Namhae Chemical 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.

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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.