Correlation Between Orbit Garant and Black Hills

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Can any of the company-specific risk be diversified away by investing in both Orbit Garant and Black Hills 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 Orbit Garant and Black Hills into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Orbit Garant Drilling and Black Hills, you can compare the effects of market volatilities on Orbit Garant and Black Hills 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 Orbit Garant with a short position of Black Hills. Check out your portfolio center. Please also check ongoing floating volatility patterns of Orbit Garant and Black Hills.

Diversification Opportunities for Orbit Garant and Black Hills

0.35
  Correlation Coefficient

Weak diversification

The 3 months correlation between Orbit and Black is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Orbit Garant Drilling and Black Hills in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Black Hills and Orbit Garant 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 Orbit Garant Drilling are associated (or correlated) with Black Hills. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Black Hills has no effect on the direction of Orbit Garant i.e., Orbit Garant and Black Hills go up and down completely randomly.

Pair Corralation between Orbit Garant and Black Hills

Assuming the 90 days horizon Orbit Garant Drilling is expected to generate 3.84 times more return on investment than Black Hills. However, Orbit Garant is 3.84 times more volatile than Black Hills. It trades about 0.03 of its potential returns per unit of risk. Black Hills is currently generating about -0.03 per unit of risk. If you would invest  38.00  in Orbit Garant Drilling on February 5, 2024 and sell it today you would earn a total of  5.00  from holding Orbit Garant Drilling or generate 13.16% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy99.7%
ValuesDaily Returns

Orbit Garant Drilling  vs.  Black Hills

 Performance 
       Timeline  
Orbit Garant Drilling 

Risk-Adjusted Performance

2 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Orbit Garant Drilling are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Orbit Garant may actually be approaching a critical reversion point that can send shares even higher in June 2024.
Black Hills 

Risk-Adjusted Performance

11 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Black Hills are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak forward-looking signals, Black Hills demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Orbit Garant and Black Hills Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Orbit Garant and Black Hills

The main advantage of trading using opposite Orbit Garant and Black Hills positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Orbit Garant position performs unexpectedly, Black Hills 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 Black Hills will offset losses from the drop in Black Hills' long position.
The idea behind Orbit Garant Drilling and Black Hills 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.
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.

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