Correlation Between Crown Electrokinetics and Orica

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

By analyzing existing cross correlation between Crown Electrokinetics Corp and Orica Limited, you can compare the effects of market volatilities on Crown Electrokinetics and Orica 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 Crown Electrokinetics with a short position of Orica. Check out your portfolio center. Please also check ongoing floating volatility patterns of Crown Electrokinetics and Orica.

Diversification Opportunities for Crown Electrokinetics and Orica

0.46

Correlation Coefficient

Crown Electrokinetics  Orica

Very weak diversification

The 3 months correlation between Crown and Orica is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Crown Electrokinetics Corp and Orica Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Orica Limited and Crown Electrokinetics 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 Crown Electrokinetics Corp are associated (or correlated) with Orica. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Orica Limited has no effect on the direction of Crown Electrokinetics i.e., Crown Electrokinetics and Orica go up and down completely randomly.

Pair Corralation between Crown Electrokinetics and Orica

Given the investment horizon of 90 days Crown Electrokinetics Corp is expected to under-perform the Orica. In addition to that, Crown Electrokinetics is 19.08 times more volatile than Orica Limited. It trades about -0.34 of its total potential returns per unit of risk. Orica Limited is currently generating about -0.13 per unit of volatility. If you would invest  1,093  in Orica Limited on September 13, 2024 and sell it today you would lose (33.00) from holding Orica Limited or give up 3.02% of portfolio value over 90 days.

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

Crown Electrokinetics Corp  vs.  Orica Limited

Crown Electrokinetics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Crown Electrokinetics Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's forward-looking signals remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Orica Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Orica Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable fundamental indicators, Orica is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Crown Electrokinetics and Orica

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

The idea behind Crown Electrokinetics Corp and Orica Limited 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.