Correlation Between Oron Group and Baran

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

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

Diversification Opportunities for Oron Group and Baran

0.88

Correlation Coefficient

Oron Group  Baran

Very poor diversification

The 3 months correlation between Oron and Baran is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Oron Group Investments and Baran Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baran Group and Oron Group 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 Oron Group Investments are associated (or correlated) with Baran. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Baran Group has no effect on the direction of Oron Group i.e., Oron Group and Baran go up and down completely randomly.

Pair Corralation between Oron Group and Baran

Assuming the 90 days trading horizon Oron Group Investments is expected to generate 0.43 times more return on investment than Baran. However, Oron Group Investments is 2.31 times less risky than Baran. It trades about 0.31 of its potential returns per unit of risk. Baran Group is currently generating about 0.09 per unit of risk. If you would invest  95,300  in Oron Group Investments on September 28, 2024 and sell it today you would earn a total of  7,200  from holding Oron Group Investments or generate 7.56% return on investment over 90 days.

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

Oron Group Investments  vs.  Baran Group

Oron Group Investments

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Oron Group Investments are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Oron Group sustained solid returns over the last few months and may actually be approaching a breakup point.

Baran Group

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Baran Group are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Baran sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Oron Group and Baran

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

The idea behind Oron Group Investments and Baran Group 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.