Correlation Between Oak Ridge and Firsthand Alternative

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

By analyzing existing cross correlation between Oak Ridge Dynamic and Firsthand Alternative Energy, you can compare the effects of market volatilities on Oak Ridge and Firsthand Alternative 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 Oak Ridge with a short position of Firsthand Alternative. Check out your portfolio center. Please also check ongoing floating volatility patterns of Oak Ridge and Firsthand Alternative.

Diversification Opportunities for Oak Ridge and Firsthand Alternative

0.89

Correlation Coefficient

Oak Ridge  Firsthand Alternative

Very poor diversification

The 3 months correlation between Oak and Firsthand is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Oak Ridge Dynamic and Firsthand Alternative Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Firsthand Alternative and Oak Ridge 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 Oak Ridge Dynamic are associated (or correlated) with Firsthand Alternative. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Firsthand Alternative has no effect on the direction of Oak Ridge i.e., Oak Ridge and Firsthand Alternative go up and down completely randomly.

Pair Corralation between Oak Ridge and Firsthand Alternative

Assuming the 90 days horizon Oak Ridge Dynamic is expected to generate 0.7 times more return on investment than Firsthand Alternative. However, Oak Ridge Dynamic is 1.43 times less risky than Firsthand Alternative. It trades about -0.1 of its potential returns per unit of risk. Firsthand Alternative Energy is currently generating about -0.17 per unit of risk. If you would invest  1,502  in Oak Ridge Dynamic on December 29, 2024 and sell it today you would lose (118.00) from holding Oak Ridge Dynamic or give up 7.86% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.39%
Values	Daily Returns

Oak Ridge Dynamic  vs.  Firsthand Alternative Energy

Oak Ridge Dynamic

Risk-Adjusted Performance

Very Weak

Over the last 90 days Oak Ridge Dynamic 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.

Firsthand Alternative

Risk-Adjusted Performance

Very Weak

Over the last 90 days Firsthand Alternative Energy has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's technical and fundamental indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Pair Trading with Oak Ridge and Firsthand Alternative

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

The idea behind Oak Ridge Dynamic and Firsthand Alternative Energy 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.