Correlation Between ORIX and Toyota Tsusho

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

By analyzing existing cross correlation between ORIX Corporation and Toyota Tsusho, you can compare the effects of market volatilities on ORIX and Toyota Tsusho 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 Toyota Tsusho. Check out your portfolio center. Please also check ongoing floating volatility patterns of ORIX and Toyota Tsusho.

Diversification Opportunities for ORIX and Toyota Tsusho

0.77

Correlation Coefficient

ORIX  Toyota Tsusho

Poor diversification

The 3 months correlation between ORIX and Toyota is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding ORIX Corp. and Toyota Tsusho in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Toyota Tsusho 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 Toyota Tsusho. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Toyota Tsusho has no effect on the direction of ORIX i.e., ORIX and Toyota Tsusho go up and down completely randomly.

Pair Corralation between ORIX and Toyota Tsusho

Assuming the 90 days horizon ORIX is expected to generate 2.24 times less return on investment than Toyota Tsusho. But when comparing it to its historical volatility, ORIX Corporation is 1.56 times less risky than Toyota Tsusho. It trades about 0.13 of its potential returns per unit of risk. Toyota Tsusho is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  1,480  in Toyota Tsusho on April 21, 2025 and sell it today you would earn a total of  390.00  from holding Toyota Tsusho or generate 26.35% return on investment over 90 days.

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

ORIX Corp.  vs.  Toyota Tsusho

ORIX

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in ORIX Corporation are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, ORIX may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Toyota Tsusho

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Toyota Tsusho are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Toyota Tsusho reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ORIX and Toyota Tsusho

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

The idea behind ORIX Corporation and Toyota Tsusho 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.