Correlation Between HJ ShipBuilding and Orbitech

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

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

Diversification Opportunities for HJ ShipBuilding and Orbitech

0.24

Correlation Coefficient

HJ ShipBuilding  Orbitech

Modest diversification

The 3 months correlation between 097230 and Orbitech is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding HJ ShipBuilding Construction and Orbitech Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Orbitech and HJ ShipBuilding 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 HJ ShipBuilding Construction 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 HJ ShipBuilding i.e., HJ ShipBuilding and Orbitech go up and down completely randomly.

Pair Corralation between HJ ShipBuilding and Orbitech

Assuming the 90 days trading horizon HJ ShipBuilding Construction is expected to generate 1.71 times more return on investment than Orbitech. However, HJ ShipBuilding is 1.71 times more volatile than Orbitech Co. It trades about 0.18 of its potential returns per unit of risk. Orbitech Co is currently generating about -0.01 per unit of risk. If you would invest  293,000  in HJ ShipBuilding Construction on September 1, 2024 and sell it today you would earn a total of  162,500  from holding HJ ShipBuilding Construction or generate 55.46% return on investment over 90 days.

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

HJ ShipBuilding Construction  vs.  Orbitech Co

HJ ShipBuilding Cons

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in HJ ShipBuilding Construction are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, HJ ShipBuilding sustained solid returns over the last few months and may actually be approaching a breakup point.

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 somewhat strong basic indicators, Orbitech is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with HJ ShipBuilding and Orbitech

The main advantage of trading using opposite HJ ShipBuilding and Orbitech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HJ ShipBuilding 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 HJ ShipBuilding Construction 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.

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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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.