Correlation Between ORIX Leasing and Avanceon

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

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

Diversification Opportunities for ORIX Leasing and Avanceon

0.42

Correlation Coefficient

ORIX Leasing  Avanceon

Very weak diversification

The 3 months correlation between ORIX and Avanceon is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding ORIX Leasing Pakistan and Avanceon in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Avanceon and ORIX Leasing 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 Leasing Pakistan are associated (or correlated) with Avanceon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Avanceon has no effect on the direction of ORIX Leasing i.e., ORIX Leasing and Avanceon go up and down completely randomly.

Pair Corralation between ORIX Leasing and Avanceon

Assuming the 90 days trading horizon ORIX Leasing Pakistan is expected to generate 0.94 times more return on investment than Avanceon. However, ORIX Leasing Pakistan is 1.07 times less risky than Avanceon. It trades about -0.06 of its potential returns per unit of risk. Avanceon is currently generating about -0.08 per unit of risk. If you would invest  3,809  in ORIX Leasing Pakistan on December 23, 2024 and sell it today you would lose (199.00) from holding ORIX Leasing Pakistan or give up 5.22% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.41%
Values	Daily Returns

ORIX Leasing Pakistan  vs.  Avanceon

ORIX Leasing Pakistan

Risk-Adjusted Performance

Very Weak

Over the last 90 days ORIX Leasing Pakistan has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, ORIX Leasing is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Avanceon

Risk-Adjusted Performance

Very Weak

Over the last 90 days Avanceon has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest conflicting performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pair Trading with ORIX Leasing and Avanceon

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

The idea behind ORIX Leasing Pakistan and Avanceon 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.

Check out your portfolio center.

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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.