Correlation Between Orix Corp and Lexinfintech Holdings

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

Diversification Opportunities for Orix Corp and Lexinfintech Holdings

0.07
  Correlation Coefficient

Significant diversification

The 3 months correlation between Orix and Lexinfintech is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Orix Corp Ads and Lexinfintech Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lexinfintech Holdings 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 Lexinfintech Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lexinfintech Holdings has no effect on the direction of Orix Corp i.e., Orix Corp and Lexinfintech Holdings go up and down completely randomly.

Pair Corralation between Orix Corp and Lexinfintech Holdings

Allowing for the 90-day total investment horizon Orix Corp Ads is expected to generate 0.34 times more return on investment than Lexinfintech Holdings. However, Orix Corp Ads is 2.97 times less risky than Lexinfintech Holdings. It trades about 0.04 of its potential returns per unit of risk. Lexinfintech Holdings is currently generating about 0.01 per unit of risk. If you would invest  8,702  in Orix Corp Ads on December 30, 2023 and sell it today you would earn a total of  2,318  from holding Orix Corp Ads or generate 26.64% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Orix Corp Ads  vs.  Lexinfintech Holdings

 Performance 
       Timeline  
Orix Corp Ads 

Risk-Adjusted Performance

18 of 100

 
Low
 
High
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Orix Corp Ads are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, Orix Corp showed solid returns over the last few months and may actually be approaching a breakup point.
Lexinfintech Holdings 

Risk-Adjusted Performance

1 of 100

 
Low
 
High
Very Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Lexinfintech Holdings are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Lexinfintech Holdings is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Orix Corp and Lexinfintech Holdings Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Orix Corp and Lexinfintech Holdings

The main advantage of trading using opposite Orix Corp and Lexinfintech Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Orix Corp position performs unexpectedly, Lexinfintech Holdings 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 Lexinfintech Holdings will offset losses from the drop in Lexinfintech Holdings' long position.
The idea behind Orix Corp Ads and Lexinfintech Holdings 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.

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