Correlation Between Associated Capital and OFS Capital

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

By analyzing existing cross correlation between Associated Capital Group and OFS Capital Corp, you can compare the effects of market volatilities on Associated Capital and OFS Capital 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 Associated Capital with a short position of OFS Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Associated Capital and OFS Capital.

Diversification Opportunities for Associated Capital and OFS Capital

0.03

Correlation Coefficient

Associated Capital  OFS Capital

Significant diversification

The 3 months correlation between Associated and OFS is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Associated Capital Group and OFS Capital Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OFS Capital Corp and Associated Capital 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 Associated Capital Group are associated (or correlated) with OFS Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OFS Capital Corp has no effect on the direction of Associated Capital i.e., Associated Capital and OFS Capital go up and down completely randomly.

Pair Corralation between Associated Capital and OFS Capital

Allowing for the 90-day total investment horizon Associated Capital is expected to generate 2.07 times less return on investment than OFS Capital. In addition to that, Associated Capital is 1.09 times more volatile than OFS Capital Corp. It trades about 0.08 of its total potential returns per unit of risk. OFS Capital Corp is currently generating about 0.18 per unit of volatility. If you would invest  763.00  in OFS Capital Corp on December 28, 2024 and sell it today you would earn a total of  137.00  from holding OFS Capital Corp or generate 17.96% return on investment over 90 days.

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

Associated Capital Group  vs.  OFS Capital Corp

Associated Capital

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Associated Capital Group are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile fundamental indicators, Associated Capital may actually be approaching a critical reversion point that can send shares even higher in April 2025.

OFS Capital Corp

Risk-Adjusted Performance

Good

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

Pair Trading with Associated Capital and OFS Capital

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

The idea behind Associated Capital Group and OFS Capital Corp 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.