Correlation Between Orbs and OLT

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

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

Diversification Opportunities for Orbs and OLT

-0.38

Correlation Coefficient

Orbs  OLT

Very good diversification

The 3 months correlation between Orbs and OLT is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Orbs and OLT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OLT and Orbs 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 Orbs are associated (or correlated) with OLT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OLT has no effect on the direction of Orbs i.e., Orbs and OLT go up and down completely randomly.

Pair Corralation between Orbs and OLT

Assuming the 90 days trading horizon Orbs is expected to generate 0.35 times more return on investment than OLT. However, Orbs is 2.85 times less risky than OLT. It trades about 0.19 of its potential returns per unit of risk. OLT is currently generating about -0.01 per unit of risk. If you would invest  2.24  in Orbs on September 2, 2024 and sell it today you would earn a total of  1.52  from holding Orbs or generate 67.86% return on investment over 90 days.

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

Orbs  vs.  OLT

Orbs

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Orbs are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, Orbs exhibited solid returns over the last few months and may actually be approaching a breakup point.

OLT

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days OLT has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Crypto's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for OLT shareholders.

Pair Trading with Orbs and OLT

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

The idea behind Orbs and OLT 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.