Correlation Between Oasis Labs and STRAX

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

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

Diversification Opportunities for Oasis Labs and STRAX

0.94

Correlation Coefficient

Oasis Labs  STRAX

Almost no diversification

The 3 months correlation between Oasis and STRAX is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Oasis Labs and STRAX in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on STRAX and Oasis Labs 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 Oasis Labs are associated (or correlated) with STRAX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of STRAX has no effect on the direction of Oasis Labs i.e., Oasis Labs and STRAX go up and down completely randomly.

Pair Corralation between Oasis Labs and STRAX

Assuming the 90 days trading horizon Oasis Labs is expected to generate 1.2 times more return on investment than STRAX. However, Oasis Labs is 1.2 times more volatile than STRAX. It trades about 0.06 of its potential returns per unit of risk. STRAX is currently generating about 0.01 per unit of risk. If you would invest  8.86  in Oasis Labs on September 13, 2024 and sell it today you would earn a total of  3.14  from holding Oasis Labs or generate 35.44% return on investment over 90 days.

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

Oasis Labs  vs.  STRAX

Oasis Labs

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Oasis Labs are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, Oasis Labs exhibited solid returns over the last few months and may actually be approaching a breakup point.

STRAX

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in STRAX are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, STRAX exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Oasis Labs and STRAX

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

The idea behind Oasis Labs and STRAX 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.