Correlation Between Sealed Air and Orchestra BioMed

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

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

Diversification Opportunities for Sealed Air and Orchestra BioMed

0.06

Correlation Coefficient

Sealed Air  Orchestra BioMed

Significant diversification

The 3 months correlation between Sealed and Orchestra is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Sealed Air and Orchestra BioMed Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Orchestra BioMed Holdings and Sealed Air 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 Sealed Air are associated (or correlated) with Orchestra BioMed. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Orchestra BioMed Holdings has no effect on the direction of Sealed Air i.e., Sealed Air and Orchestra BioMed go up and down completely randomly.

Pair Corralation between Sealed Air and Orchestra BioMed

Considering the 90-day investment horizon Sealed Air is expected to generate 0.31 times more return on investment than Orchestra BioMed. However, Sealed Air is 3.24 times less risky than Orchestra BioMed. It trades about 0.08 of its potential returns per unit of risk. Orchestra BioMed Holdings is currently generating about 0.01 per unit of risk. If you would invest  3,404  in Sealed Air on September 5, 2024 and sell it today you would earn a total of  261.00  from holding Sealed Air or generate 7.67% return on investment over 90 days.

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

Sealed Air  vs.  Orchestra BioMed Holdings

Sealed Air

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Sealed Air are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather conflicting technical and fundamental indicators, Sealed Air may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Orchestra BioMed Holdings

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Orchestra BioMed Holdings are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy forward indicators, Orchestra BioMed is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Sealed Air and Orchestra BioMed

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

The idea behind Sealed Air and Orchestra BioMed Holdings 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.