Correlation Between Orion Energy and Hooker Furniture

Can any of the company-specific risk be diversified away by investing in both Orion Energy and Hooker Furniture 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 Hooker Furniture 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 Hooker Furniture, you can compare the effects of market volatilities on Orion Energy and Hooker Furniture 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 Hooker Furniture. Check out your portfolio center. Please also check ongoing floating volatility patterns of Orion Energy and Hooker Furniture.

Diversification Opportunities for Orion Energy and Hooker Furniture

-0.14

Correlation Coefficient

Orion Energy  Hooker Furniture

Good diversification

The 3 months correlation between Orion and Hooker is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Orion Energy Systems and Hooker Furniture in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hooker Furniture 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 Hooker Furniture. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hooker Furniture has no effect on the direction of Orion Energy i.e., Orion Energy and Hooker Furniture go up and down completely randomly.

Pair Corralation between Orion Energy and Hooker Furniture

Given the investment horizon of 90 days Orion Energy Systems is expected to under-perform the Hooker Furniture. In addition to that, Orion Energy is 1.36 times more volatile than Hooker Furniture. It trades about -0.02 of its total potential returns per unit of risk. Hooker Furniture is currently generating about 0.02 per unit of volatility. If you would invest  1,601  in Hooker Furniture on August 13, 2024 and sell it today you would earn a total of  242.00  from holding Hooker Furniture or generate 15.12% return on investment over 90 days.

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

Orion Energy Systems  vs.  Hooker Furniture

Orion Energy Systems

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Orion Energy Systems are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Orion Energy is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Hooker Furniture

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Hooker Furniture are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak technical and fundamental indicators, Hooker Furniture unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Orion Energy and Hooker Furniture

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

The idea behind Orion Energy Systems and Hooker Furniture 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.