Correlation Between Small Cap and Oshidori International

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

By analyzing existing cross correlation between Small Cap Core and Oshidori International Holdings, you can compare the effects of market volatilities on Small Cap and Oshidori International 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 Small Cap with a short position of Oshidori International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Small Cap and Oshidori International.

Diversification Opportunities for Small Cap and Oshidori International

-0.6

Correlation Coefficient

Small Cap  Oshidori International

Excellent diversification

The 3 months correlation between Small and Oshidori is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Small Cap Core and Oshidori International Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oshidori International and Small Cap 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 Small Cap Core are associated (or correlated) with Oshidori International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oshidori International has no effect on the direction of Small Cap i.e., Small Cap and Oshidori International go up and down completely randomly.

Pair Corralation between Small Cap and Oshidori International

Assuming the 90 days horizon Small Cap Core is expected to under-perform the Oshidori International. But the mutual fund apears to be less risky and, when comparing its historical volatility, Small Cap Core is 21.33 times less risky than Oshidori International. The mutual fund trades about -0.37 of its potential returns per unit of risk. The Oshidori International Holdings is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest  1.00  in Oshidori International Holdings on September 30, 2024 and sell it today you would earn a total of  2.60  from holding Oshidori International Holdings or generate 260.0% return on investment over 90 days.

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

Small Cap Core  vs.  Oshidori International Holding

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.

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 unsteady fundamental indicators, Oshidori International reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Small Cap and Oshidori International

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

The idea behind Small Cap Core and Oshidori International Holdings 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.