Correlation Between JAPAN AIRLINES and ORIX JREIT

Can any of the company-specific risk be diversified away by investing in both JAPAN AIRLINES and ORIX JREIT 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 JAPAN AIRLINES and ORIX JREIT into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between JAPAN AIRLINES and ORIX JREIT INC, you can compare the effects of market volatilities on JAPAN AIRLINES and ORIX JREIT 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 JAPAN AIRLINES with a short position of ORIX JREIT. Check out your portfolio center. Please also check ongoing floating volatility patterns of JAPAN AIRLINES and ORIX JREIT.

Diversification Opportunities for JAPAN AIRLINES and ORIX JREIT

0.02

Correlation Coefficient

JAPAN AIRLINES  ORIX JREIT

Significant diversification

The 3 months correlation between JAPAN and ORIX is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding JAPAN AIRLINES and ORIX JREIT INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ORIX JREIT INC and JAPAN AIRLINES 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 JAPAN AIRLINES are associated (or correlated) with ORIX JREIT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ORIX JREIT INC has no effect on the direction of JAPAN AIRLINES i.e., JAPAN AIRLINES and ORIX JREIT go up and down completely randomly.

Pair Corralation between JAPAN AIRLINES and ORIX JREIT

Assuming the 90 days trading horizon JAPAN AIRLINES is expected to generate 1.64 times more return on investment than ORIX JREIT. However, JAPAN AIRLINES is 1.64 times more volatile than ORIX JREIT INC. It trades about 0.1 of its potential returns per unit of risk. ORIX JREIT INC is currently generating about 0.09 per unit of risk. If you would invest  1,580  in JAPAN AIRLINES on April 25, 2025 and sell it today you would earn a total of  130.00  from holding JAPAN AIRLINES or generate 8.23% return on investment over 90 days.

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

JAPAN AIRLINES  vs.  ORIX JREIT INC

JAPAN AIRLINES

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in JAPAN AIRLINES are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile essential indicators, JAPAN AIRLINES may actually be approaching a critical reversion point that can send shares even higher in August 2025.

ORIX JREIT INC

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in ORIX JREIT INC are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, ORIX JREIT is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with JAPAN AIRLINES and ORIX JREIT

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

The idea behind JAPAN AIRLINES and ORIX JREIT INC 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.