Correlation Between Booking Holdings and Oriental Land

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

By analyzing existing cross correlation between Booking Holdings and Oriental Land Co, you can compare the effects of market volatilities on Booking Holdings and Oriental Land 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 Booking Holdings with a short position of Oriental Land. Check out your portfolio center. Please also check ongoing floating volatility patterns of Booking Holdings and Oriental Land.

Diversification Opportunities for Booking Holdings and Oriental Land

0.12

Correlation Coefficient

Booking Holdings  Oriental Land

Average diversification

The 3 months correlation between Booking and Oriental is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Booking Holdings and Oriental Land Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oriental Land and Booking Holdings 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 Booking Holdings are associated (or correlated) with Oriental Land. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oriental Land has no effect on the direction of Booking Holdings i.e., Booking Holdings and Oriental Land go up and down completely randomly.

Pair Corralation between Booking Holdings and Oriental Land

Assuming the 90 days trading horizon Booking Holdings is expected to generate 0.58 times more return on investment than Oriental Land. However, Booking Holdings is 1.73 times less risky than Oriental Land. It trades about 0.11 of its potential returns per unit of risk. Oriental Land Co is currently generating about 0.06 per unit of risk. If you would invest  192,647  in Booking Holdings on September 23, 2024 and sell it today you would earn a total of  293,953  from holding Booking Holdings or generate 152.59% return on investment over 90 days.

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

Booking Holdings  vs.  Oriental Land Co

Booking Holdings

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Booking Holdings are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, Booking Holdings reported solid returns over the last few months and may actually be approaching a breakup point.

Oriental Land

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Oriental Land Co are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Oriental Land reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Booking Holdings and Oriental Land

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

The idea behind Booking Holdings and Oriental Land Co 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.