Correlation Between Fastenal and Orient Overseas
Can any of the company-specific risk be diversified away by investing in both Fastenal and Orient Overseas 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 Fastenal and Orient Overseas into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fastenal Company and Orient Overseas Limited, you can compare the effects of market volatilities on Fastenal and Orient Overseas 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 Fastenal with a short position of Orient Overseas. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fastenal and Orient Overseas.
Diversification Opportunities for Fastenal and Orient Overseas
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between Fastenal and Orient is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Fastenal Company and Orient Overseas Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Orient Overseas and Fastenal 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 Fastenal Company are associated (or correlated) with Orient Overseas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Orient Overseas has no effect on the direction of Fastenal i.e., Fastenal and Orient Overseas go up and down completely randomly.
Pair Corralation between Fastenal and Orient Overseas
Given the investment horizon of 90 days Fastenal Company is expected to under-perform the Orient Overseas. But the stock apears to be less risky and, when comparing its historical volatility, Fastenal Company is 2.62 times less risky than Orient Overseas. The stock trades about -0.22 of its potential returns per unit of risk. The Orient Overseas Limited is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest 1,245 in Orient Overseas Limited on October 17, 2024 and sell it today you would earn a total of 221.00 from holding Orient Overseas Limited or generate 17.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 90.48% |
| Values | Daily Returns |
Fastenal Company vs. Orient Overseas Limited
Performance |
| Timeline |
| Fastenal |
| Orient Overseas |
Fastenal and Orient Overseas Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fastenal and Orient Overseas
The main advantage of trading using opposite Fastenal and Orient Overseas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fastenal position performs unexpectedly, Orient Overseas 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 Orient Overseas will offset losses from the drop in Orient Overseas' long position.| Fastenal vs. Applied Industrial Technologies | Fastenal vs. MSC Industrial Direct | Fastenal vs. Ferguson Plc | Fastenal vs. Watsco Inc |
| Orient Overseas vs. SITC International Holdings | Orient Overseas vs. COSCO SHIPPING Holdings | Orient Overseas vs. Pacific Basin Shipping | Orient Overseas vs. Mitsui OSK Lines |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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