Correlation Between Orix Corp and Saratoga Investment

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

Diversification Opportunities for Orix Corp and Saratoga Investment

-0.63

Correlation Coefficient

Orix Corp  Saratoga Investment

Excellent diversification

The 3 months correlation between Orix and Saratoga is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Orix Corp Ads and Saratoga Investment Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Saratoga Investment Corp 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 Saratoga Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Saratoga Investment Corp has no effect on the direction of Orix Corp i.e., Orix Corp and Saratoga Investment go up and down completely randomly.

Pair Corralation between Orix Corp and Saratoga Investment

Allowing for the 90-day total investment horizon Orix Corp Ads is expected to under-perform the Saratoga Investment. In addition to that, Orix Corp is 1.29 times more volatile than Saratoga Investment Corp. It trades about -0.09 of its total potential returns per unit of risk. Saratoga Investment Corp is currently generating about 0.15 per unit of volatility. If you would invest  2,298  in Saratoga Investment Corp on September 3, 2024 and sell it today you would earn a total of  271.00  from holding Saratoga Investment Corp or generate 11.79% 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.  Saratoga Investment Corp

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 latest unfluctuating performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Saratoga Investment Corp

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Saratoga Investment Corp are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady basic indicators, Saratoga Investment may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Orix Corp and Saratoga Investment

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

The idea behind Orix Corp Ads and Saratoga Investment Corp 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.

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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.