Correlation Between Bank Ozk and Sekisui House

Can any of the company-specific risk be diversified away by investing in both Bank Ozk and Sekisui House 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 Bank Ozk and Sekisui House into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Bank Ozk and Sekisui House

-0.12

Correlation Coefficient

Bank Ozk  Sekisui House

Good diversification

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

Pair Corralation between Bank Ozk and Sekisui House

Considering the 90-day investment horizon Bank Ozk is expected to generate 1.71 times more return on investment than Sekisui House. However, Bank Ozk is 1.71 times more volatile than Sekisui House Ltd. It trades about 0.03 of its potential returns per unit of risk. Sekisui House Ltd is currently generating about -0.07 per unit of risk. If you would invest  4,402  in Bank Ozk on December 28, 2024 and sell it today you would earn a total of  136.00  from holding Bank Ozk or generate 3.09% return on investment over 90 days.

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

Bank Ozk  vs.  Sekisui House Ltd

Bank Ozk

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Bank Ozk are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, Bank Ozk is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Sekisui House

Risk-Adjusted Performance

Very Weak

Over the last 90 days Sekisui House Ltd has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Sekisui House is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Bank Ozk and Sekisui House

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

The idea behind Bank Ozk and Sekisui House Ltd 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 Stocks Directory module to find actively traded stocks across global markets.