Correlation Between Tomra Systems and OriginClear
Can any of the company-specific risk be diversified away by investing in both Tomra Systems and OriginClear 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 Tomra Systems and OriginClear into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tomra Systems ASA and OriginClear, you can compare the effects of market volatilities on Tomra Systems and OriginClear 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 Tomra Systems with a short position of OriginClear. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tomra Systems and OriginClear.
Diversification Opportunities for Tomra Systems and OriginClear
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Tomra and OriginClear is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Tomra Systems ASA and OriginClear in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OriginClear and Tomra Systems 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 Tomra Systems ASA are associated (or correlated) with OriginClear. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OriginClear has no effect on the direction of Tomra Systems i.e., Tomra Systems and OriginClear go up and down completely randomly.
Pair Corralation between Tomra Systems and OriginClear
Assuming the 90 days horizon Tomra Systems ASA is expected to generate 0.49 times more return on investment than OriginClear. However, Tomra Systems ASA is 2.04 times less risky than OriginClear. It trades about 0.07 of its potential returns per unit of risk. OriginClear is currently generating about 0.01 per unit of risk. If you would invest 833.00 in Tomra Systems ASA on September 1, 2024 and sell it today you would earn a total of 467.00 from holding Tomra Systems ASA or generate 56.06% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 81.62% |
Values | Daily Returns |
Tomra Systems ASA vs. OriginClear
Performance |
Timeline |
Tomra Systems ASA |
OriginClear |
Tomra Systems and OriginClear Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Tomra Systems and OriginClear
The main advantage of trading using opposite Tomra Systems and OriginClear positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tomra Systems position performs unexpectedly, OriginClear 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 OriginClear will offset losses from the drop in OriginClear's long position.Tomra Systems vs. Ecoloclean Industrs | Tomra Systems vs. JPX Global | Tomra Systems vs. Majic Wheels Corp | Tomra Systems vs. BluMetric Environmental |
OriginClear vs. Ecoloclean Industrs | OriginClear vs. JPX Global | OriginClear vs. Majic Wheels Corp | OriginClear vs. BluMetric Environmental |
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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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