Correlation Between I-Components and Orbitech

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

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

Diversification Opportunities for I-Components and Orbitech

-0.37

Correlation Coefficient

I-Components  Orbitech

Very good diversification

The 3 months correlation between I-Components and Orbitech is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding i Components Co and Orbitech Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Orbitech and I-Components 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 i Components Co are associated (or correlated) with Orbitech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Orbitech has no effect on the direction of I-Components i.e., I-Components and Orbitech go up and down completely randomly.

Pair Corralation between I-Components and Orbitech

Assuming the 90 days trading horizon i Components Co is expected to generate 0.55 times more return on investment than Orbitech. However, i Components Co is 1.83 times less risky than Orbitech. It trades about 0.08 of its potential returns per unit of risk. Orbitech Co is currently generating about -0.07 per unit of risk. If you would invest  433,500  in i Components Co on September 23, 2024 and sell it today you would earn a total of  33,500  from holding i Components Co or generate 7.73% return on investment over 90 days.

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

i Components Co  vs.  Orbitech Co

i Components

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in i Components Co are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, I-Components may actually be approaching a critical reversion point that can send shares even higher in January 2025.

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.

Pair Trading with I-Components and Orbitech

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

The idea behind i Components Co and Orbitech Co 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.