Correlation Between Orapi SA and Spineguard

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

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

Diversification Opportunities for Orapi SA and Spineguard

0.52

Correlation Coefficient

Orapi SA  Spineguard

Very weak diversification

The 3 months correlation between Orapi and Spineguard is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Orapi SA and Spineguard in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Spineguard and Orapi SA 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 Orapi SA are associated (or correlated) with Spineguard. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Spineguard has no effect on the direction of Orapi SA i.e., Orapi SA and Spineguard go up and down completely randomly.

Pair Corralation between Orapi SA and Spineguard

Assuming the 90 days trading horizon Orapi SA is expected to generate 9.21 times less return on investment than Spineguard. But when comparing it to its historical volatility, Orapi SA is 7.85 times less risky than Spineguard. It trades about 0.12 of its potential returns per unit of risk. Spineguard is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  14.00  in Spineguard on September 3, 2024 and sell it today you would earn a total of  11.00  from holding Spineguard or generate 78.57% return on investment over 90 days.

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

Orapi SA  vs.  Spineguard

Orapi SA

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Orapi SA are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Orapi SA may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Spineguard

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Spineguard are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Spineguard reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Orapi SA and Spineguard

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

The idea behind Orapi SA and Spineguard 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.