Correlation Between Avient Corp and Orion Engineered

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

Diversification Opportunities for Avient Corp and Orion Engineered

0.32
  Correlation Coefficient

Weak diversification

The 3 months correlation between Avient and Orion is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Avient Corp and Orion Engineered Carbons in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Orion Engineered Carbons and Avient Corp 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 Avient Corp are associated (or correlated) with Orion Engineered. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Orion Engineered Carbons has no effect on the direction of Avient Corp i.e., Avient Corp and Orion Engineered go up and down completely randomly.

Pair Corralation between Avient Corp and Orion Engineered

Given the investment horizon of 90 days Avient Corp is expected to generate 2.14 times less return on investment than Orion Engineered. But when comparing it to its historical volatility, Avient Corp is 2.05 times less risky than Orion Engineered. It trades about 0.16 of its potential returns per unit of risk. Orion Engineered Carbons is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  1,573  in Orion Engineered Carbons on August 24, 2024 and sell it today you would earn a total of  227.00  from holding Orion Engineered Carbons or generate 14.43% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Avient Corp  vs.  Orion Engineered Carbons

 Performance 
       Timeline  
Avient Corp 

Risk-Adjusted Performance

4 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in Avient Corp are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Avient Corp may actually be approaching a critical reversion point that can send shares even higher in December 2024.
Orion Engineered Carbons 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Orion Engineered Carbons has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Orion Engineered is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Avient Corp and Orion Engineered Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Avient Corp and Orion Engineered

The main advantage of trading using opposite Avient Corp and Orion Engineered positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Avient Corp position performs unexpectedly, Orion Engineered 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 Orion Engineered will offset losses from the drop in Orion Engineered's long position.
The idea behind Avient Corp and Orion Engineered Carbons 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.

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