Correlation Between Catalystmillburn and Oshidori International

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

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

Diversification Opportunities for Catalystmillburn and Oshidori International

0.78

Correlation Coefficient

Catalystmillburn  Oshidori International

Poor diversification

The 3 months correlation between Catalystmillburn and Oshidori is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Catalystmillburn Hedge Strateg and Oshidori International Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oshidori International and Catalystmillburn 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 Catalystmillburn Hedge Strategy 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 Catalystmillburn i.e., Catalystmillburn and Oshidori International go up and down completely randomly.

Pair Corralation between Catalystmillburn and Oshidori International

Assuming the 90 days horizon Catalystmillburn is expected to generate 153.96 times less return on investment than Oshidori International. But when comparing it to its historical volatility, Catalystmillburn Hedge Strategy is 292.45 times less risky than Oshidori International. It trades about 0.24 of its potential returns per unit of risk. Oshidori International Holdings is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  0.07  in Oshidori International Holdings on September 14, 2024 and sell it today you would earn a total of  0.93  from holding Oshidori International Holdings or generate 1328.57% return on investment over 90 days.

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

Catalystmillburn Hedge Strateg  vs.  Oshidori International Holding

Catalystmillburn Hedge

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Catalystmillburn Hedge Strategy are ranked lower than 18 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Catalystmillburn may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Oshidori International

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Oshidori International Holdings are ranked lower than 9 (%) 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 Catalystmillburn and Oshidori International

The main advantage of trading using opposite Catalystmillburn and Oshidori International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Catalystmillburn 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 Catalystmillburn Hedge Strategy 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.