Correlation Between OFX Group and Neptune Digital

Can any of the company-specific risk be diversified away by investing in both OFX Group and Neptune Digital 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 Neptune Digital 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 Neptune Digital Assets, you can compare the effects of market volatilities on OFX Group and Neptune Digital 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 Neptune Digital. Check out your portfolio center. Please also check ongoing floating volatility patterns of OFX Group and Neptune Digital.

Diversification Opportunities for OFX Group and Neptune Digital

0.39

Correlation Coefficient

OFX Group  Neptune Digital

Weak diversification

The 3 months correlation between OFX and Neptune is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding OFX Group Ltd and Neptune Digital Assets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Neptune Digital Assets 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 Neptune Digital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Neptune Digital Assets has no effect on the direction of OFX Group i.e., OFX Group and Neptune Digital go up and down completely randomly.

Pair Corralation between OFX Group and Neptune Digital

Assuming the 90 days horizon OFX Group is expected to generate 7.94 times less return on investment than Neptune Digital. But when comparing it to its historical volatility, OFX Group Ltd is 1.53 times less risky than Neptune Digital. It trades about 0.04 of its potential returns per unit of risk. Neptune Digital Assets is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest  18.00  in Neptune Digital Assets on September 12, 2024 and sell it today you would earn a total of  62.00  from holding Neptune Digital Assets or generate 344.44% return on investment over 90 days.

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

OFX Group Ltd  vs.  Neptune Digital Assets

OFX Group

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in OFX Group Ltd are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, OFX Group showed solid returns over the last few months and may actually be approaching a breakup point.

Neptune Digital Assets

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Neptune Digital Assets are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Neptune Digital reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with OFX Group and Neptune Digital

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

The idea behind OFX Group Ltd and Neptune Digital Assets 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.