Correlation Between Koppers Holdings and Orion Engineered

Can any of the company-specific risk be diversified away by investing in both Koppers Holdings 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 Koppers Holdings and Orion Engineered into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Koppers Holdings and Orion Engineered Carbons, you can compare the effects of market volatilities on Koppers Holdings 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 Koppers Holdings with a short position of Orion Engineered. Check out your portfolio center. Please also check ongoing floating volatility patterns of Koppers Holdings and Orion Engineered.

Diversification Opportunities for Koppers Holdings and Orion Engineered

0.46

Correlation Coefficient

Koppers Holdings  Orion Engineered

Very weak diversification

The 3 months correlation between Koppers and Orion is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Koppers Holdings 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 Koppers Holdings 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 Koppers Holdings 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 Koppers Holdings i.e., Koppers Holdings and Orion Engineered go up and down completely randomly.

Pair Corralation between Koppers Holdings and Orion Engineered

Considering the 90-day investment horizon Koppers Holdings is expected to under-perform the Orion Engineered. In addition to that, Koppers Holdings is 3.4 times more volatile than Orion Engineered Carbons. It trades about 0.0 of its total potential returns per unit of risk. Orion Engineered Carbons is currently generating about 0.02 per unit of volatility. If you would invest  2,409  in Orion Engineered Carbons on February 4, 2024 and sell it today you would earn a total of  15.00  from holding Orion Engineered Carbons or generate 0.62% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Koppers Holdings  vs.  Orion Engineered Carbons

Koppers Holdings

Risk-Adjusted Performance

3 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Koppers Holdings are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Koppers Holdings may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Orion Engineered Carbons

Risk-Adjusted Performance

8 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Orion Engineered Carbons are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak technical and fundamental indicators, Orion Engineered may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Pair Trading with Koppers Holdings and Orion Engineered

The main advantage of trading using opposite Koppers Holdings and Orion Engineered positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Koppers Holdings 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 Koppers Holdings 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..