Correlation Between OppFi and Hong Kong

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

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

Diversification Opportunities for OppFi and Hong Kong

0.8

Correlation Coefficient

OppFi  Hong Kong

Very poor diversification

The 3 months correlation between OppFi and Hong is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding OppFi Inc and Hong Kong Land in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hong Kong Land and OppFi 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 OppFi Inc are associated (or correlated) with Hong Kong. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hong Kong Land has no effect on the direction of OppFi i.e., OppFi and Hong Kong go up and down completely randomly.

Pair Corralation between OppFi and Hong Kong

Given the investment horizon of 90 days OppFi Inc is expected to generate 2.38 times more return on investment than Hong Kong. However, OppFi is 2.38 times more volatile than Hong Kong Land. It trades about 0.4 of its potential returns per unit of risk. Hong Kong Land is currently generating about -0.15 per unit of risk. If you would invest  485.00  in OppFi Inc on September 4, 2024 and sell it today you would earn a total of  283.00  from holding OppFi Inc or generate 58.35% return on investment over 90 days.

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

OppFi Inc  vs.  Hong Kong Land

OppFi Inc

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in OppFi Inc are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Despite fairly unsteady technical and fundamental indicators, OppFi demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Hong Kong Land

Risk-Adjusted Performance

9 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Hong Kong Land are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak forward-looking signals, Hong Kong showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with OppFi and Hong Kong

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

The idea behind OppFi Inc and Hong Kong Land 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.