Correlation Between Oil and ORIX Leasing
Can any of the company-specific risk be diversified away by investing in both Oil and ORIX Leasing 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 Oil and ORIX Leasing into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Oil and Gas and ORIX Leasing Pakistan, you can compare the effects of market volatilities on Oil and ORIX Leasing 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 Oil with a short position of ORIX Leasing. Check out your portfolio center. Please also check ongoing floating volatility patterns of Oil and ORIX Leasing.
Diversification Opportunities for Oil and ORIX Leasing
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Oil and ORIX is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Oil and Gas and ORIX Leasing Pakistan in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ORIX Leasing Pakistan and Oil 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 Oil and Gas are associated (or correlated) with ORIX Leasing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ORIX Leasing Pakistan has no effect on the direction of Oil i.e., Oil and ORIX Leasing go up and down completely randomly.
Pair Corralation between Oil and ORIX Leasing
Assuming the 90 days trading horizon Oil and Gas is expected to generate 1.57 times more return on investment than ORIX Leasing. However, Oil is 1.57 times more volatile than ORIX Leasing Pakistan. It trades about 0.1 of its potential returns per unit of risk. ORIX Leasing Pakistan is currently generating about 0.11 per unit of risk. If you would invest 6,194 in Oil and Gas on September 4, 2024 and sell it today you would earn a total of 12,982 from holding Oil and Gas or generate 209.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 98.14% |
| Values | Daily Returns |
Oil and Gas vs. ORIX Leasing Pakistan
Performance |
| Timeline |
| Oil and Gas |
| ORIX Leasing Pakistan |
Oil and ORIX Leasing Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Oil and ORIX Leasing
The main advantage of trading using opposite Oil and ORIX Leasing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Oil position performs unexpectedly, ORIX Leasing 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 ORIX Leasing will offset losses from the drop in ORIX Leasing's long position.The idea behind Oil and Gas and ORIX Leasing Pakistan 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.| ORIX Leasing vs. Masood Textile Mills | ORIX Leasing vs. Fauji Foods | ORIX Leasing vs. KSB Pumps | ORIX Leasing vs. Mari Petroleum |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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