Correlation Between ORIX and Yuexiu Transport
Can any of the company-specific risk be diversified away by investing in both ORIX and Yuexiu Transport 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 ORIX and Yuexiu Transport into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ORIX Corporation and Yuexiu Transport Infrastructure, you can compare the effects of market volatilities on ORIX and Yuexiu Transport 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 ORIX with a short position of Yuexiu Transport. Check out your portfolio center. Please also check ongoing floating volatility patterns of ORIX and Yuexiu Transport.
Diversification Opportunities for ORIX and Yuexiu Transport
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between ORIX and Yuexiu is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding ORIX Corp. and Yuexiu Transport Infrastructur in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yuexiu Transport Inf and ORIX 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 ORIX Corporation are associated (or correlated) with Yuexiu Transport. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yuexiu Transport Inf has no effect on the direction of ORIX i.e., ORIX and Yuexiu Transport go up and down completely randomly.
Pair Corralation between ORIX and Yuexiu Transport
Assuming the 90 days horizon ORIX is expected to generate 8.1 times less return on investment than Yuexiu Transport. But when comparing it to its historical volatility, ORIX Corporation is 3.32 times less risky than Yuexiu Transport. It trades about 0.07 of its potential returns per unit of risk. Yuexiu Transport Infrastructure is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 34.00 in Yuexiu Transport Infrastructure on August 30, 2024 and sell it today you would earn a total of 9.00 from holding Yuexiu Transport Infrastructure or generate 26.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ORIX Corp. vs. Yuexiu Transport Infrastructur
Performance |
| Timeline |
| ORIX |
| Yuexiu Transport Inf |
ORIX and Yuexiu Transport Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ORIX and Yuexiu Transport
The main advantage of trading using opposite ORIX and Yuexiu Transport positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ORIX position performs unexpectedly, Yuexiu Transport 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 Yuexiu Transport will offset losses from the drop in Yuexiu Transport's long position.The idea behind ORIX Corporation and Yuexiu Transport Infrastructure 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.| Yuexiu Transport vs. Superior Plus Corp | Yuexiu Transport vs. NMI Holdings | Yuexiu Transport vs. Origin Agritech | Yuexiu Transport vs. SIVERS SEMICONDUCTORS AB |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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