Correlation Between Oshidori International and Small Cap

Can any of the company-specific risk be diversified away by investing in both Oshidori International and Small Cap 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 Small Cap 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 Small Cap Core, you can compare the effects of market volatilities on Oshidori International and Small Cap 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 Small Cap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Oshidori International and Small Cap.

Diversification Opportunities for Oshidori International and Small Cap

-0.07

Correlation Coefficient

Oshidori International  Small Cap

Good diversification

The 3 months correlation between Oshidori and Small is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Oshidori International Holding and Small Cap Core in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Small Cap Core 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 Small Cap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Small Cap Core has no effect on the direction of Oshidori International i.e., Oshidori International and Small Cap go up and down completely randomly.

Pair Corralation between Oshidori International and Small Cap

Assuming the 90 days horizon Oshidori International Holdings is expected to generate 65.35 times more return on investment than Small Cap. However, Oshidori International is 65.35 times more volatile than Small Cap Core. It trades about 0.15 of its potential returns per unit of risk. Small Cap Core is currently generating about -0.1 per unit of risk. If you would invest  0.07  in Oshidori International Holdings on September 21, 2024 and sell it today you would earn a total of  3.53  from holding Oshidori International Holdings or generate 5042.86% return on investment over 90 days.

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

Oshidori International Holding  vs.  Small Cap Core

Oshidori International

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Oshidori International Holdings are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain fundamental indicators, Oshidori International reported solid returns over the last few months and may actually be approaching a breakup point.

Small Cap Core

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Small Cap Core 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 basic indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Pair Trading with Oshidori International and Small Cap

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

The idea behind Oshidori International Holdings and Small Cap Core 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.