Correlation Between Orix Corp and SHIONOGI

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

Diversification Opportunities for Orix Corp and SHIONOGI

0.61

Correlation Coefficient

Orix Corp  SHIONOGI

Poor diversification

The 3 months correlation between Orix and SHIONOGI is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Orix Corp Ads and SHIONOGI LTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SHIONOGI LTD 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 SHIONOGI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SHIONOGI LTD has no effect on the direction of Orix Corp i.e., Orix Corp and SHIONOGI go up and down completely randomly.

Pair Corralation between Orix Corp and SHIONOGI

Assuming the 90 days trading horizon Orix Corp Ads is expected to generate 1.0 times more return on investment than SHIONOGI. However, Orix Corp Ads is 1.0 times less risky than SHIONOGI. It trades about -0.01 of its potential returns per unit of risk. SHIONOGI LTD is currently generating about -0.01 per unit of risk. If you would invest  10,100  in Orix Corp Ads on September 21, 2024 and sell it today you would lose (150.00) from holding Orix Corp Ads or give up 1.49% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Orix Corp Ads  vs.  SHIONOGI LTD

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 newest stock price disturbance, may contribute to mid-run losses for the stockholders.

SHIONOGI LTD

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SHIONOGI LTD has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, SHIONOGI is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Orix Corp and SHIONOGI

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

The idea behind Orix Corp Ads and SHIONOGI LTD 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.