Correlation Between Orix Corp and Booking Holdings

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

Diversification Opportunities for Orix Corp and Booking Holdings

-0.45

Correlation Coefficient

Orix Corp  Booking Holdings

Very good diversification

The 3 months correlation between Orix and Booking is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Orix Corp Ads and Booking Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Booking 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 Booking Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Booking Holdings has no effect on the direction of Orix Corp i.e., Orix Corp and Booking Holdings go up and down completely randomly.

Pair Corralation between Orix Corp and Booking Holdings

Assuming the 90 days trading horizon Orix Corp Ads is expected to under-perform the Booking Holdings. But the stock apears to be less risky and, when comparing its historical volatility, Orix Corp Ads is 1.04 times less risky than Booking Holdings. The stock trades about 0.0 of its potential returns per unit of risk. The Booking Holdings is currently generating about 0.38 of returns per unit of risk over similar time horizon. If you would invest  339,124  in Booking Holdings on September 4, 2024 and sell it today you would earn a total of  155,976  from holding Booking Holdings or generate 45.99% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Orix Corp Ads  vs.  Booking Holdings

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. Despite nearly stable basic indicators, Orix Corp is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Booking Holdings

Risk-Adjusted Performance

30 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Booking Holdings are ranked lower than 30 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, Booking Holdings reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Orix Corp and Booking Holdings

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

The idea behind Orix Corp Ads and Booking Holdings 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.