Correlation Between Nanophase Technol and Orica
Can any of the company-specific risk be diversified away by investing in both Nanophase Technol and Orica 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 Nanophase Technol and Orica into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nanophase Technol and Orica Ltd ADR, you can compare the effects of market volatilities on Nanophase Technol and Orica 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 Nanophase Technol with a short position of Orica. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nanophase Technol and Orica.
Diversification Opportunities for Nanophase Technol and Orica
-0.07 | Correlation Coefficient |
Good diversification
The 3 months correlation between Nanophase and Orica is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Nanophase Technol and Orica Ltd ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Orica Ltd ADR and Nanophase Technol 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 Nanophase Technol are associated (or correlated) with Orica. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Orica Ltd ADR has no effect on the direction of Nanophase Technol i.e., Nanophase Technol and Orica go up and down completely randomly.
Pair Corralation between Nanophase Technol and Orica
Given the investment horizon of 90 days Nanophase Technol is expected to generate 3.36 times more return on investment than Orica. However, Nanophase Technol is 3.36 times more volatile than Orica Ltd ADR. It trades about 0.04 of its potential returns per unit of risk. Orica Ltd ADR is currently generating about 0.03 per unit of risk. If you would invest 136.00 in Nanophase Technol on August 26, 2024 and sell it today you would earn a total of 4.00 from holding Nanophase Technol or generate 2.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 36.3% |
| Values | Daily Returns |
Nanophase Technol vs. Orica Ltd ADR
Performance |
| Timeline |
| Nanophase Technol |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Orica Ltd ADR |
Nanophase Technol and Orica Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nanophase Technol and Orica
The main advantage of trading using opposite Nanophase Technol and Orica positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nanophase Technol position performs unexpectedly, Orica 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 Orica will offset losses from the drop in Orica's long position.| Nanophase Technol vs. Iofina plc | Nanophase Technol vs. Green Star Products | Nanophase Technol vs. Greystone Logistics | Nanophase Technol vs. Crown Electrokinetics Corp |
| Orica vs. First Graphene | Orica vs. HUMANA INC | Orica vs. Aquagold International | Orica vs. Barloworld Ltd ADR |
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 Stocks Directory module to find actively traded stocks across global markets.
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