Correlation Between Orion Energy and GrafTech International

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

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

Diversification Opportunities for Orion Energy and GrafTech International

-0.72

Correlation Coefficient

Orion Energy  GrafTech International

Pay attention - limited upside

The 3 months correlation between Orion and GrafTech is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Orion Energy Systems and GrafTech International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GrafTech International and Orion Energy 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 Orion Energy Systems are associated (or correlated) with GrafTech International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GrafTech International has no effect on the direction of Orion Energy i.e., Orion Energy and GrafTech International go up and down completely randomly.

Pair Corralation between Orion Energy and GrafTech International

Given the investment horizon of 90 days Orion Energy Systems is expected to under-perform the GrafTech International. But the stock apears to be less risky and, when comparing its historical volatility, Orion Energy Systems is 2.06 times less risky than GrafTech International. The stock trades about -0.07 of its potential returns per unit of risk. The GrafTech International is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest  61.00  in GrafTech International on May 2, 2025 and sell it today you would earn a total of  86.00  from holding GrafTech International or generate 140.98% return on investment over 90 days.

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

Orion Energy Systems  vs.  GrafTech International

Orion Energy Systems

Risk-Adjusted Performance

Very Weak

Over the last 90 days Orion Energy Systems has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in August 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

GrafTech International

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in GrafTech International are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, GrafTech International reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Orion Energy and GrafTech International

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

The idea behind Orion Energy Systems and GrafTech International 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.