Correlation Between Basic Fit and Oriental Land

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

By analyzing existing cross correlation between Basic Fit NV and Oriental Land Co, you can compare the effects of market volatilities on Basic Fit and Oriental Land 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 Basic Fit with a short position of Oriental Land. Check out your portfolio center. Please also check ongoing floating volatility patterns of Basic Fit and Oriental Land.

Diversification Opportunities for Basic Fit and Oriental Land

0.64

Correlation Coefficient

Basic Fit  Oriental Land

Poor diversification

The 3 months correlation between Basic and Oriental is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Basic Fit NV and Oriental Land Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oriental Land and Basic Fit 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 Basic Fit NV are associated (or correlated) with Oriental Land. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oriental Land has no effect on the direction of Basic Fit i.e., Basic Fit and Oriental Land go up and down completely randomly.

Pair Corralation between Basic Fit and Oriental Land

Assuming the 90 days horizon Basic Fit NV is expected to under-perform the Oriental Land. But the pink sheet apears to be less risky and, when comparing its historical volatility, Basic Fit NV is 3.25 times less risky than Oriental Land. The pink sheet trades about -0.01 of its potential returns per unit of risk. The Oriental Land Co is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  2,121  in Oriental Land Co on December 29, 2024 and sell it today you would lose (279.00) from holding Oriental Land Co or give up 13.15% of portfolio value over 90 days.

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

Basic Fit NV  vs.  Oriental Land Co

Basic Fit NV

Risk-Adjusted Performance

Very Weak

Over the last 90 days Basic Fit NV has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, Basic Fit is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Oriental Land

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Oriental Land Co are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain essential indicators, Oriental Land may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Basic Fit and Oriental Land

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

The idea behind Basic Fit NV and Oriental Land Co 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.