Correlation Between Orion Engineered and Koppers Holdings
Can any of the company-specific risk be diversified away by investing in both Orion Engineered and Koppers Holdings 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 Orion Engineered and Koppers Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Orion Engineered Carbons and Koppers Holdings, you can compare the effects of market volatilities on Orion Engineered and Koppers Holdings 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 Orion Engineered with a short position of Koppers Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Orion Engineered and Koppers Holdings.
Diversification Opportunities for Orion Engineered and Koppers Holdings
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Orion and Koppers is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Orion Engineered Carbons and Koppers Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Koppers Holdings and Orion Engineered 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 Orion Engineered Carbons are associated (or correlated) with Koppers Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Koppers Holdings has no effect on the direction of Orion Engineered i.e., Orion Engineered and Koppers Holdings go up and down completely randomly.
Pair Corralation between Orion Engineered and Koppers Holdings
Considering the 90-day investment horizon Orion Engineered Carbons is expected to generate 1.3 times more return on investment than Koppers Holdings. However, Orion Engineered is 1.3 times more volatile than Koppers Holdings. It trades about 0.17 of its potential returns per unit of risk. Koppers Holdings is currently generating about 0.16 per unit of risk. 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 Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Orion Engineered Carbons vs. Koppers Holdings
Performance |
| Timeline |
| Orion Engineered Carbons |
| Koppers Holdings |
Orion Engineered and Koppers Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Orion Engineered and Koppers Holdings
The main advantage of trading using opposite Orion Engineered and Koppers Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Orion Engineered position performs unexpectedly, Koppers Holdings 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 Koppers Holdings will offset losses from the drop in Koppers Holdings' long position.| Orion Engineered vs. Eshallgo Class A | Orion Engineered vs. Amtech Systems | Orion Engineered vs. Gold Fields Ltd | Orion Engineered vs. Aegean Airlines SA |
| Koppers Holdings vs. H B Fuller | Koppers Holdings vs. Minerals Technologies | Koppers Holdings vs. Quaker Chemical | Koppers Holdings vs. Oil Dri |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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