Correlation Between Oberweis China and Hodges Small

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

By analyzing existing cross correlation between Oberweis China Opportunities and Hodges Small Cap, you can compare the effects of market volatilities on Oberweis China and Hodges Small 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 Oberweis China with a short position of Hodges Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Oberweis China and Hodges Small.

Diversification Opportunities for Oberweis China and Hodges Small

-0.74

Correlation Coefficient

Oberweis China  Hodges Small

Pay attention - limited upside

The 3 months correlation between Oberweis and Hodges is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Oberweis China Opportunities and Hodges Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hodges Small Cap and Oberweis China 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 Oberweis China Opportunities are associated (or correlated) with Hodges Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hodges Small Cap has no effect on the direction of Oberweis China i.e., Oberweis China and Hodges Small go up and down completely randomly.

Pair Corralation between Oberweis China and Hodges Small

Assuming the 90 days horizon Oberweis China Opportunities is expected to generate 1.44 times more return on investment than Hodges Small. However, Oberweis China is 1.44 times more volatile than Hodges Small Cap. It trades about 0.12 of its potential returns per unit of risk. Hodges Small Cap is currently generating about -0.11 per unit of risk. If you would invest  690.00  in Oberweis China Opportunities on December 27, 2024 and sell it today you would earn a total of  101.00  from holding Oberweis China Opportunities or generate 14.64% return on investment over 90 days.

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

Oberweis China Opportunities  vs.  Hodges Small Cap

Oberweis China Oppor

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Oberweis China Opportunities are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical indicators, Oberweis China showed solid returns over the last few months and may actually be approaching a breakup point.

Hodges Small Cap

Risk-Adjusted Performance

Very Weak

Over the last 90 days Hodges Small Cap has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with Oberweis China and Hodges Small

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

The idea behind Oberweis China Opportunities and Hodges Small Cap 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..