Correlation Between Orix Corp and Diamond Hill

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

Diversification Opportunities for Orix Corp and Diamond Hill

-0.43

Correlation Coefficient

Orix Corp  Diamond Hill

Very good diversification

The 3 months correlation between Orix and Diamond is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Orix Corp Ads and Diamond Hill Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Diamond Hill Investment 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 Diamond Hill. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Diamond Hill Investment has no effect on the direction of Orix Corp i.e., Orix Corp and Diamond Hill go up and down completely randomly.

Pair Corralation between Orix Corp and Diamond Hill

Allowing for the 90-day total investment horizon Orix Corp Ads is expected to under-perform the Diamond Hill. In addition to that, Orix Corp is 1.28 times more volatile than Diamond Hill Investment. It trades about -0.11 of its total potential returns per unit of risk. Diamond Hill Investment is currently generating about 0.04 per unit of volatility. If you would invest  15,059  in Diamond Hill Investment on January 29, 2024 and sell it today you would earn a total of  90.00  from holding Diamond Hill Investment or generate 0.6% return on investment over 90 days.

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

Orix Corp Ads  vs.  Diamond Hill Investment

Orix Corp Ads

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Orix Corp Ads are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Orix Corp is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Diamond Hill Investment

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Diamond Hill Investment has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's forward indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with Orix Corp and Diamond Hill

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

The idea behind Orix Corp Ads and Diamond Hill Investment 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.