Correlation Between Oshidori International and Smallcap World

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

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

Diversification Opportunities for Oshidori International and Smallcap World

0.12

Correlation Coefficient

Oshidori International  Smallcap World

Average diversification

The 3 months correlation between Oshidori and Smallcap is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Oshidori International Holding and Smallcap World Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Smallcap World and Oshidori International 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 Oshidori International Holdings are associated (or correlated) with Smallcap World. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Smallcap World has no effect on the direction of Oshidori International i.e., Oshidori International and Smallcap World go up and down completely randomly.

Pair Corralation between Oshidori International and Smallcap World

Assuming the 90 days horizon Oshidori International Holdings is expected to generate 146.54 times more return on investment than Smallcap World. However, Oshidori International is 146.54 times more volatile than Smallcap World Fund. It trades about 0.13 of its potential returns per unit of risk. Smallcap World Fund is currently generating about 0.04 per unit of risk. If you would invest  0.07  in Oshidori International Holdings on August 30, 2024 and sell it today you would earn a total of  0.93  from holding Oshidori International Holdings or generate 1328.57% return on investment over 90 days.

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

Oshidori International Holding  vs.  Smallcap World Fund

Oshidori International

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Oshidori International Holdings are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak fundamental indicators, Oshidori International reported solid returns over the last few months and may actually be approaching a breakup point.

Smallcap World

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Smallcap World Fund are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental drivers, Smallcap World is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Oshidori International and Smallcap World

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

The idea behind Oshidori International Holdings and Smallcap World Fund 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.