Correlation Between OFX Group and Mentor Capital

Can any of the company-specific risk be diversified away by investing in both OFX Group and Mentor Capital 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 OFX Group and Mentor Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between OFX Group Ltd and Mentor Capital, you can compare the effects of market volatilities on OFX Group and Mentor Capital 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 OFX Group with a short position of Mentor Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of OFX Group and Mentor Capital.

Diversification Opportunities for OFX Group and Mentor Capital

0.23

Correlation Coefficient

OFX Group  Mentor Capital

Modest diversification

The 3 months correlation between OFX and Mentor is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding OFX Group Ltd and Mentor Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mentor Capital and OFX Group 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 OFX Group Ltd are associated (or correlated) with Mentor Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mentor Capital has no effect on the direction of OFX Group i.e., OFX Group and Mentor Capital go up and down completely randomly.

Pair Corralation between OFX Group and Mentor Capital

Assuming the 90 days horizon OFX Group Ltd is expected to generate 0.25 times more return on investment than Mentor Capital. However, OFX Group Ltd is 4.0 times less risky than Mentor Capital. It trades about -0.13 of its potential returns per unit of risk. Mentor Capital is currently generating about -0.05 per unit of risk. If you would invest  435.00  in OFX Group Ltd on December 27, 2024 and sell it today you would lose (70.00) from holding OFX Group Ltd or give up 16.09% of portfolio value over 90 days.

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

OFX Group Ltd  vs.  Mentor Capital

OFX Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days OFX Group Ltd has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic 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 company investors.

Mentor Capital

Risk-Adjusted Performance

Very Weak

Over the last 90 days Mentor Capital has generated negative risk-adjusted returns adding no value to investors with long positions. Even with fragile performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in April 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with OFX Group and Mentor Capital

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

The idea behind OFX Group Ltd and Mentor Capital 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.