Correlation Between Oshidori International and Mesabi Trust

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

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

Diversification Opportunities for Oshidori International and Mesabi Trust

0.7

Correlation Coefficient

Oshidori International  Mesabi Trust

Poor diversification

The 3 months correlation between Oshidori and Mesabi is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Oshidori International Holding and Mesabi Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mesabi Trust and Oshidori International 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 Oshidori International Holdings are associated (or correlated) with Mesabi Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mesabi Trust has no effect on the direction of Oshidori International i.e., Oshidori International and Mesabi Trust go up and down completely randomly.

Pair Corralation between Oshidori International and Mesabi Trust

Assuming the 90 days horizon Oshidori International Holdings is expected to generate 25.79 times more return on investment than Mesabi Trust. However, Oshidori International is 25.79 times more volatile than Mesabi Trust. It trades about 0.08 of its potential returns per unit of risk. Mesabi Trust is currently generating about 0.07 per unit of risk. If you would invest  0.07  in Oshidori International Holdings on September 24, 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	Significant
Accuracy	99.6%
Values	Daily Returns

Oshidori International Holding  vs.  Mesabi Trust

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.

Mesabi Trust

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Mesabi Trust are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, Mesabi Trust sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Oshidori International and Mesabi Trust

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

The idea behind Oshidori International Holdings and Mesabi Trust 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.

Check out your portfolio center.

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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.