Correlation Between Orix Corp and B Riley

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

Diversification Opportunities for Orix Corp and B Riley

-0.11

Correlation Coefficient

Orix Corp  B Riley

Good diversification

The 3 months correlation between Orix and RILY is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Orix Corp Ads and B Riley Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on B Riley Financial 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 B Riley. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of B Riley Financial has no effect on the direction of Orix Corp i.e., Orix Corp and B Riley go up and down completely randomly.

Pair Corralation between Orix Corp and B Riley

Allowing for the 90-day total investment horizon Orix Corp Ads is expected to under-perform the B Riley. But the stock apears to be less risky and, when comparing its historical volatility, Orix Corp Ads is 3.73 times less risky than B Riley. The stock trades about -0.3 of its potential returns per unit of risk. The B Riley Financial is currently generating about -0.07 of returns per unit of risk over similar time horizon. If you would invest  504.00  in B Riley Financial on October 10, 2024 and sell it today you would lose (26.00) from holding B Riley Financial or give up 5.16% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.24%
Values	Daily Returns

Orix Corp Ads  vs.  B Riley Financial

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 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.

B Riley Financial

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in B Riley Financial are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak essential indicators, B Riley showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Orix Corp and B Riley

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

The idea behind Orix Corp Ads and B Riley Financial 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.