Correlation Between Orix Corp and ELECOM

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

Diversification Opportunities for Orix Corp and ELECOM

0.53

Correlation Coefficient

Orix Corp  ELECOM

Very weak diversification

The 3 months correlation between Orix and ELECOM is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Orix Corp Ads and ELECOM LTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ELECOM 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 ELECOM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ELECOM LTD has no effect on the direction of Orix Corp i.e., Orix Corp and ELECOM go up and down completely randomly.

Pair Corralation between Orix Corp and ELECOM

Assuming the 90 days trading horizon Orix Corp Ads is expected to generate 0.77 times more return on investment than ELECOM. However, Orix Corp Ads is 1.3 times less risky than ELECOM. It trades about 0.15 of its potential returns per unit of risk. ELECOM LTD is currently generating about 0.08 per unit of risk. If you would invest  1,740  in Orix Corp Ads on April 25, 2025 and sell it today you would earn a total of  180.00  from holding Orix Corp Ads or generate 10.34% return on investment over 90 days.

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

Orix Corp Ads  vs.  ELECOM LTD

Orix Corp Ads

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Orix Corp Ads are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Orix Corp may actually be approaching a critical reversion point that can send shares even higher in August 2025.

ELECOM LTD

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in ELECOM LTD are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, ELECOM may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with Orix Corp and ELECOM

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

The idea behind Orix Corp Ads and ELECOM 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.