Correlation Between Orbitech and Hanjoo Light

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Can any of the company-specific risk be diversified away by investing in both Orbitech and Hanjoo Light 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 Orbitech and Hanjoo Light into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Orbitech Co and Hanjoo Light Metal, you can compare the effects of market volatilities on Orbitech and Hanjoo Light 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 Orbitech with a short position of Hanjoo Light. Check out your portfolio center. Please also check ongoing floating volatility patterns of Orbitech and Hanjoo Light.

Diversification Opportunities for Orbitech and Hanjoo Light

0.51
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Orbitech and Hanjoo is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Orbitech Co and Hanjoo Light Metal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hanjoo Light Metal and Orbitech 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 Orbitech Co are associated (or correlated) with Hanjoo Light. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hanjoo Light Metal has no effect on the direction of Orbitech i.e., Orbitech and Hanjoo Light go up and down completely randomly.

Pair Corralation between Orbitech and Hanjoo Light

Assuming the 90 days trading horizon Orbitech Co is expected to generate 3.35 times more return on investment than Hanjoo Light. However, Orbitech is 3.35 times more volatile than Hanjoo Light Metal. It trades about 0.24 of its potential returns per unit of risk. Hanjoo Light Metal is currently generating about 0.18 per unit of risk. If you would invest  196,800  in Orbitech Co on November 3, 2024 and sell it today you would earn a total of  35,200  from holding Orbitech Co or generate 17.89% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Orbitech Co  vs.  Hanjoo Light Metal

 Performance 
       Timeline  
Orbitech 

Risk-Adjusted Performance

3 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in Orbitech Co are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Orbitech may actually be approaching a critical reversion point that can send shares even higher in March 2025.
Hanjoo Light Metal 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Hanjoo Light Metal has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in March 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Orbitech and Hanjoo Light Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Orbitech and Hanjoo Light

The main advantage of trading using opposite Orbitech and Hanjoo Light positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Orbitech position performs unexpectedly, Hanjoo Light 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 Hanjoo Light will offset losses from the drop in Hanjoo Light's long position.
The idea behind Orbitech Co and Hanjoo Light Metal 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.

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