Correlation Between Sterling Capital and Oshidori International

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

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

Diversification Opportunities for Sterling Capital and Oshidori International

0.57

Correlation Coefficient

Sterling Capital  Oshidori International

Very weak diversification

The 3 months correlation between Sterling and Oshidori is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Sterling Capital Focus and Oshidori International Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oshidori International and Sterling Capital 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 Sterling Capital Focus 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 Sterling Capital i.e., Sterling Capital and Oshidori International go up and down completely randomly.

Pair Corralation between Sterling Capital and Oshidori International

Considering the 90-day investment horizon Sterling Capital is expected to generate 238.93 times less return on investment than Oshidori International. But when comparing it to its historical volatility, Sterling Capital Focus is 105.08 times less risky than Oshidori International. It trades about 0.07 of its potential returns per unit of risk. Oshidori International Holdings is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  0.07  in Oshidori International Holdings on September 22, 2024 and sell it today you would earn a total of  3.53  from holding Oshidori International Holdings or generate 5042.86% return on investment over 90 days.

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

Sterling Capital Focus  vs.  Oshidori International Holding

Sterling Capital Focus

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Sterling Capital Focus are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable fundamental indicators, Sterling Capital is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

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

Pair Trading with Sterling Capital and Oshidori International

The main advantage of trading using opposite Sterling Capital and Oshidori International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sterling Capital 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 Sterling Capital Focus 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.