Correlation Between ORIX and Iron Road

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

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

Diversification Opportunities for ORIX and Iron Road

-0.54

Correlation Coefficient

ORIX  Iron Road

Excellent diversification

The 3 months correlation between ORIX and Iron is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding ORIX Corp. and Iron Road Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Iron Road Limited and ORIX 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 Corporation are associated (or correlated) with Iron Road. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Iron Road Limited has no effect on the direction of ORIX i.e., ORIX and Iron Road go up and down completely randomly.

Pair Corralation between ORIX and Iron Road

Assuming the 90 days horizon ORIX is expected to generate 61.16 times less return on investment than Iron Road. But when comparing it to its historical volatility, ORIX Corporation is 50.21 times less risky than Iron Road. It trades about 0.12 of its potential returns per unit of risk. Iron Road Limited is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  1.15  in Iron Road Limited on April 24, 2025 and sell it today you would lose (0.50) from holding Iron Road Limited or give up 43.48% of portfolio value over 90 days.

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

ORIX Corp.  vs.  Iron Road Limited

ORIX

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in ORIX Corporation are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, ORIX may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Iron Road Limited

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Iron Road Limited are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Iron Road reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ORIX and Iron Road

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

The idea behind ORIX Corporation and Iron Road Limited 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.