Correlation Between Orbit Garant and North American

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

By analyzing existing cross correlation between Orbit Garant Drilling and North American Construction, you can compare the effects of market volatilities on Orbit Garant and North American 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 Orbit Garant with a short position of North American. Check out your portfolio center. Please also check ongoing floating volatility patterns of Orbit Garant and North American.

Diversification Opportunities for Orbit Garant and North American

0.63

Correlation Coefficient

Orbit Garant  North American

Poor diversification

The 3 months correlation between Orbit and North is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Orbit Garant Drilling and North American Construction in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on North American Const and Orbit Garant 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 Orbit Garant Drilling are associated (or correlated) with North American. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of North American Const has no effect on the direction of Orbit Garant i.e., Orbit Garant and North American go up and down completely randomly.

Pair Corralation between Orbit Garant and North American

Assuming the 90 days trading horizon Orbit Garant Drilling is expected to generate 1.38 times more return on investment than North American. However, Orbit Garant is 1.38 times more volatile than North American Construction. It trades about 0.17 of its potential returns per unit of risk. North American Construction is currently generating about 0.13 per unit of risk. If you would invest  58.00  in Orbit Garant Drilling on September 27, 2024 and sell it today you would earn a total of  23.00  from holding Orbit Garant Drilling or generate 39.66% return on investment over 90 days.

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

Orbit Garant Drilling  vs.  North American Construction

Orbit Garant Drilling

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Orbit Garant Drilling are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating fundamental indicators, Orbit Garant displayed solid returns over the last few months and may actually be approaching a breakup point.

North American Const

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in North American Construction are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, North American displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Orbit Garant and North American

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

The idea behind Orbit Garant Drilling and North American Construction 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.