Correlation Between Orix Corp and Legend Holdings
Can any of the company-specific risk be diversified away by investing in both Orix Corp and Legend Holdings 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 Corp and Legend Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Orix Corp Ads and Legend Holdings, you can compare the effects of market volatilities on Orix Corp and Legend Holdings 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 Corp with a short position of Legend Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Orix Corp and Legend Holdings.
Diversification Opportunities for Orix Corp and Legend Holdings
-0.76 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Orix and Legend is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding Orix Corp Ads and Legend Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Legend Holdings and Orix Corp 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 Corp Ads are associated (or correlated) with Legend Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Legend Holdings has no effect on the direction of Orix Corp i.e., Orix Corp and Legend Holdings go up and down completely randomly.
Pair Corralation between Orix Corp and Legend Holdings
Assuming the 90 days trading horizon Orix Corp Ads is expected to under-perform the Legend Holdings. But the stock apears to be less risky and, when comparing its historical volatility, Orix Corp Ads is 2.6 times less risky than Legend Holdings. The stock trades about -0.06 of its potential returns per unit of risk. The Legend Holdings is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 62.00 in Legend Holdings on September 2, 2024 and sell it today you would earn a total of 22.00 from holding Legend Holdings or generate 35.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Orix Corp Ads vs. Legend Holdings
Performance |
| Timeline |
| Orix Corp Ads |
| Legend Holdings |
Orix Corp and Legend Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Orix Corp and Legend Holdings
The main advantage of trading using opposite Orix Corp and Legend Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Orix Corp position performs unexpectedly, Legend Holdings 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 Legend Holdings will offset losses from the drop in Legend Holdings' long position.| Orix Corp vs. WIZZ AIR HLDGUNSPADR4 | Orix Corp vs. NTG Nordic Transport | Orix Corp vs. Enter Air SA | Orix Corp vs. BROADSTNET LEADL 00025 |
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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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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