Correlation Between Orix Corp and Credicorp

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

Diversification Opportunities for Orix Corp and Credicorp

-0.43

Correlation Coefficient

Orix Corp  Credicorp

Very good diversification

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

Pair Corralation between Orix Corp and Credicorp

Allowing for the 90-day total investment horizon Orix Corp Ads is expected to generate 1.01 times more return on investment than Credicorp. However, Orix Corp is 1.01 times more volatile than Credicorp. It trades about -0.04 of its potential returns per unit of risk. Credicorp is currently generating about -0.24 per unit of risk. If you would invest  10,762  in Orix Corp Ads on September 23, 2024 and sell it today you would lose (182.00) from holding Orix Corp Ads or give up 1.69% of portfolio value over 90 days.

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

Orix Corp Ads  vs.  Credicorp

Orix Corp Ads

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Orix Corp Ads has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Credicorp

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Credicorp are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Credicorp is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Orix Corp and Credicorp

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

The idea behind Orix Corp Ads and Credicorp 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..