Correlation Between Open Network and Marlin

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

By analyzing existing cross correlation between The Open Network and Marlin, you can compare the effects of market volatilities on Open Network and Marlin 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 Open Network with a short position of Marlin. Check out your portfolio center. Please also check ongoing floating volatility patterns of Open Network and Marlin.

Diversification Opportunities for Open Network and Marlin

-0.06

Correlation Coefficient

Open Network  Marlin

Good diversification

The 3 months correlation between Open and Marlin is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding The Open Network and Marlin in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marlin and Open Network 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 The Open Network are associated (or correlated) with Marlin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Marlin has no effect on the direction of Open Network i.e., Open Network and Marlin go up and down completely randomly.

Pair Corralation between Open Network and Marlin

Assuming the 90 days trading horizon The Open Network is expected to generate 0.8 times more return on investment than Marlin. However, The Open Network is 1.24 times less risky than Marlin. It trades about 0.1 of its potential returns per unit of risk. Marlin is currently generating about -0.08 per unit of risk. If you would invest  636.00  in The Open Network on February 14, 2024 and sell it today you would earn a total of  52.00  from holding The Open Network or generate 8.18% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

The Open Network  vs.  Marlin

Open Network

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in The Open Network are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady basic indicators, Open Network displayed solid returns over the last few months and may actually be approaching a breakup point.

Marlin

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Marlin has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Marlin is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Open Network and Marlin

The main advantage of trading using opposite Open Network and Marlin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Open Network position performs unexpectedly, Marlin 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 Marlin will offset losses from the drop in Marlin's long position.

The idea behind The Open Network and Marlin 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.