Correlation Between Orient Overseas and ENERGY ONE

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

By analyzing existing cross correlation between Orient Overseas Limited and ENERGY ONE, you can compare the effects of market volatilities on Orient Overseas and ENERGY ONE 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 Orient Overseas with a short position of ENERGY ONE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Orient Overseas and ENERGY ONE.

Diversification Opportunities for Orient Overseas and ENERGY ONE

0.81

Correlation Coefficient

Orient Overseas  ENERGY ONE

Very poor diversification

The 3 months correlation between Orient and ENERGY is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Orient Overseas Limited and ENERGY ONE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ENERGY ONE and Orient Overseas 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 Orient Overseas Limited are associated (or correlated) with ENERGY ONE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ENERGY ONE has no effect on the direction of Orient Overseas i.e., Orient Overseas and ENERGY ONE go up and down completely randomly.

Pair Corralation between Orient Overseas and ENERGY ONE

Assuming the 90 days trading horizon Orient Overseas is expected to generate 1.97 times less return on investment than ENERGY ONE. In addition to that, Orient Overseas is 1.05 times more volatile than ENERGY ONE. It trades about 0.08 of its total potential returns per unit of risk. ENERGY ONE is currently generating about 0.17 per unit of volatility. If you would invest  600.00  in ENERGY ONE on March 25, 2025 and sell it today you would earn a total of  210.00  from holding ENERGY ONE or generate 35.0% return on investment over 90 days.

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

Orient Overseas Limited  vs.  ENERGY ONE

Orient Overseas

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Orient Overseas Limited are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain forward indicators, Orient Overseas reported solid returns over the last few months and may actually be approaching a breakup point.

ENERGY ONE

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in ENERGY ONE are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile basic indicators, ENERGY ONE exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Orient Overseas and ENERGY ONE

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

The idea behind Orient Overseas Limited and ENERGY ONE 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.