Correlation Between Burlington Stores and Oji Holdings

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

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

Diversification Opportunities for Burlington Stores and Oji Holdings

-0.05

Correlation Coefficient

Burlington Stores  Oji Holdings

Good diversification

The 3 months correlation between Burlington and Oji is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Burlington Stores and Oji Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oji Holdings and Burlington Stores 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 Burlington Stores are associated (or correlated) with Oji Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oji Holdings has no effect on the direction of Burlington Stores i.e., Burlington Stores and Oji Holdings go up and down completely randomly.

Pair Corralation between Burlington Stores and Oji Holdings

Assuming the 90 days trading horizon Burlington Stores is expected to generate 1.2 times more return on investment than Oji Holdings. However, Burlington Stores is 1.2 times more volatile than Oji Holdings. It trades about 0.1 of its potential returns per unit of risk. Oji Holdings is currently generating about 0.06 per unit of risk. If you would invest  24,400  in Burlington Stores on September 16, 2024 and sell it today you would earn a total of  3,000  from holding Burlington Stores or generate 12.3% return on investment over 90 days.

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

Burlington Stores  vs.  Oji Holdings

Burlington Stores

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Burlington Stores are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Burlington Stores may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Oji Holdings

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Oji Holdings are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, Oji Holdings may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Burlington Stores and Oji Holdings

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

The idea behind Burlington Stores and Oji 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.