Correlation Between Orica and Crown Electrokinetics

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

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

Diversification Opportunities for Orica and Crown Electrokinetics

0.46

Correlation Coefficient

Orica  Crown Electrokinetics

Very weak diversification

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

Pair Corralation between Orica and Crown Electrokinetics

Assuming the 90 days horizon Orica Limited is expected to generate 0.1 times more return on investment than Crown Electrokinetics. However, Orica Limited is 10.5 times less risky than Crown Electrokinetics. It trades about 0.05 of its potential returns per unit of risk. Crown Electrokinetics Corp is currently generating about -0.04 per unit of risk. If you would invest  855.00  in Orica Limited on September 13, 2024 and sell it today you would earn a total of  205.00  from holding Orica Limited or generate 23.98% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	59.6%
Values	Daily Returns

Orica Limited  vs.  Crown Electrokinetics Corp

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.

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.

Pair Trading with Orica and Crown Electrokinetics

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

The idea behind Orica Limited and Crown Electrokinetics Corp 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..