Correlation Between Orix Corp and TERADATA

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

Diversification Opportunities for Orix Corp and TERADATA

-0.85

Correlation Coefficient

Orix Corp  TERADATA

Pay attention - limited upside

The 3 months correlation between Orix and TERADATA is -0.85. Overlapping area represents the amount of risk that can be diversified away by holding Orix Corp Ads and TERADATA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TERADATA 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 TERADATA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TERADATA has no effect on the direction of Orix Corp i.e., Orix Corp and TERADATA go up and down completely randomly.

Pair Corralation between Orix Corp and TERADATA

Assuming the 90 days trading horizon Orix Corp Ads is expected to generate 1.26 times more return on investment than TERADATA. However, Orix Corp is 1.26 times more volatile than TERADATA. It trades about 0.04 of its potential returns per unit of risk. TERADATA is currently generating about 0.01 per unit of risk. If you would invest  9,850  in Orix Corp Ads on September 3, 2024 and sell it today you would earn a total of  750.00  from holding Orix Corp Ads or generate 7.61% return on investment over 90 days.

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

Orix Corp Ads  vs.  TERADATA

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. Despite nearly stable basic indicators, Orix Corp is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

TERADATA

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in TERADATA are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, TERADATA unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Orix Corp and TERADATA

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

The idea behind Orix Corp Ads and TERADATA 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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.