Correlation Between Caledonia Mining and OneSavings Bank

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

By analyzing existing cross correlation between Caledonia Mining and OneSavings Bank PLC, you can compare the effects of market volatilities on Caledonia Mining and OneSavings Bank 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 Caledonia Mining with a short position of OneSavings Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Caledonia Mining and OneSavings Bank.

Diversification Opportunities for Caledonia Mining and OneSavings Bank

-0.58

Correlation Coefficient

Caledonia Mining  OneSavings Bank

Excellent diversification

The 3 months correlation between Caledonia and OneSavings is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Caledonia Mining and OneSavings Bank PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OneSavings Bank PLC and Caledonia Mining 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 Caledonia Mining are associated (or correlated) with OneSavings Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OneSavings Bank PLC has no effect on the direction of Caledonia Mining i.e., Caledonia Mining and OneSavings Bank go up and down completely randomly.

Pair Corralation between Caledonia Mining and OneSavings Bank

Assuming the 90 days trading horizon Caledonia Mining is expected to under-perform the OneSavings Bank. But the stock apears to be less risky and, when comparing its historical volatility, Caledonia Mining is 1.1 times less risky than OneSavings Bank. The stock trades about -0.27 of its potential returns per unit of risk. The OneSavings Bank PLC is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  38,200  in OneSavings Bank PLC on September 22, 2024 and sell it today you would earn a total of  1,040  from holding OneSavings Bank PLC or generate 2.72% return on investment over 90 days.

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

Caledonia Mining  vs.  OneSavings Bank PLC

Caledonia Mining

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Caledonia Mining has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

OneSavings Bank PLC

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in OneSavings Bank PLC are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, OneSavings Bank is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Caledonia Mining and OneSavings Bank

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

The idea behind Caledonia Mining and OneSavings Bank PLC 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.