Correlation Between ORIX JREIT and Inmobiliaria Colonial

Can any of the company-specific risk be diversified away by investing in both ORIX JREIT and Inmobiliaria Colonial 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 JREIT and Inmobiliaria Colonial into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between ORIX JREIT INC and Inmobiliaria Colonial SOCIMI, you can compare the effects of market volatilities on ORIX JREIT and Inmobiliaria Colonial 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 JREIT with a short position of Inmobiliaria Colonial. Check out your portfolio center. Please also check ongoing floating volatility patterns of ORIX JREIT and Inmobiliaria Colonial.

Diversification Opportunities for ORIX JREIT and Inmobiliaria Colonial

-0.61

Correlation Coefficient

ORIX JREIT  Inmobiliaria Colonial

Excellent diversification

The 3 months correlation between ORIX and Inmobiliaria is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding ORIX JREIT INC and Inmobiliaria Colonial SOCIMI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Inmobiliaria Colonial and ORIX JREIT 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 JREIT INC are associated (or correlated) with Inmobiliaria Colonial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Inmobiliaria Colonial has no effect on the direction of ORIX JREIT i.e., ORIX JREIT and Inmobiliaria Colonial go up and down completely randomly.

Pair Corralation between ORIX JREIT and Inmobiliaria Colonial

Assuming the 90 days horizon ORIX JREIT INC is expected to generate 0.6 times more return on investment than Inmobiliaria Colonial. However, ORIX JREIT INC is 1.66 times less risky than Inmobiliaria Colonial. It trades about 0.1 of its potential returns per unit of risk. Inmobiliaria Colonial SOCIMI is currently generating about -0.19 per unit of risk. If you would invest  96,000  in ORIX JREIT INC on September 19, 2024 and sell it today you would earn a total of  2,000  from holding ORIX JREIT INC or generate 2.08% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	95.65%
Values	Daily Returns

ORIX JREIT INC  vs.  Inmobiliaria Colonial SOCIMI

ORIX JREIT INC

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in ORIX JREIT INC are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, ORIX JREIT is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Inmobiliaria Colonial

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Inmobiliaria Colonial SOCIMI has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's fundamental indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with ORIX JREIT and Inmobiliaria Colonial

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

The idea behind ORIX JREIT INC and Inmobiliaria Colonial SOCIMI 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.