Correlation Between Orix Corp and Nu Holdings

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

Diversification Opportunities for Orix Corp and Nu Holdings

-0.02

Correlation Coefficient

Orix Corp  Nu Holdings

Good diversification

The 3 months correlation between Orix and Nu Holdings is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Orix Corp Ads and Nu Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nu Holdings 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 Nu Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nu Holdings has no effect on the direction of Orix Corp i.e., Orix Corp and Nu Holdings go up and down completely randomly.

Pair Corralation between Orix Corp and Nu Holdings

Allowing for the 90-day total investment horizon Orix Corp Ads is expected to generate 0.46 times more return on investment than Nu Holdings. However, Orix Corp Ads is 2.16 times less risky than Nu Holdings. It trades about 0.01 of its potential returns per unit of risk. Nu Holdings is currently generating about -0.24 per unit of risk. If you would invest  10,537  in Orix Corp Ads on September 23, 2024 and sell it today you would earn a total of  43.00  from holding Orix Corp Ads or generate 0.41% return on investment over 90 days.

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

Orix Corp Ads  vs.  Nu Holdings

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.

Nu Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nu Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Orix Corp and Nu Holdings

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

The idea behind Orix Corp Ads and Nu Holdings 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.