Correlation Between Orix Corp and Consumer Portfolio

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

Diversification Opportunities for Orix Corp and Consumer Portfolio

-0.58

Correlation Coefficient

Orix Corp  Consumer Portfolio

Excellent diversification

The 3 months correlation between Orix and Consumer is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Orix Corp Ads and Consumer Portfolio Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Consumer Portfolio 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 Consumer Portfolio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Consumer Portfolio has no effect on the direction of Orix Corp i.e., Orix Corp and Consumer Portfolio go up and down completely randomly.

Pair Corralation between Orix Corp and Consumer Portfolio

Allowing for the 90-day total investment horizon Orix Corp Ads is expected to under-perform the Consumer Portfolio. But the stock apears to be less risky and, when comparing its historical volatility, Orix Corp Ads is 1.51 times less risky than Consumer Portfolio. The stock trades about -0.06 of its potential returns per unit of risk. The Consumer Portfolio Services is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  857.00  in Consumer Portfolio Services on September 5, 2024 and sell it today you would earn a total of  200.00  from holding Consumer Portfolio Services or generate 23.34% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

Orix Corp Ads  vs.  Consumer Portfolio Services

Orix Corp Ads

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Orix Corp Ads has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Orix Corp is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Consumer Portfolio

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Consumer Portfolio Services are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Consumer Portfolio unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Orix Corp and Consumer Portfolio

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

The idea behind Orix Corp Ads and Consumer Portfolio Services 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.