Correlation Between OFX Group and GreenBank Capital

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

By analyzing existing cross correlation between OFX Group Ltd and GreenBank Capital, you can compare the effects of market volatilities on OFX Group and GreenBank Capital 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 OFX Group with a short position of GreenBank Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of OFX Group and GreenBank Capital.

Diversification Opportunities for OFX Group and GreenBank Capital

-0.33

Correlation Coefficient

OFX Group  GreenBank Capital

Very good diversification

The 3 months correlation between OFX and GreenBank is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding OFX Group Ltd and GreenBank Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GreenBank Capital and OFX Group 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 OFX Group Ltd are associated (or correlated) with GreenBank Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GreenBank Capital has no effect on the direction of OFX Group i.e., OFX Group and GreenBank Capital go up and down completely randomly.

Pair Corralation between OFX Group and GreenBank Capital

Assuming the 90 days horizon OFX Group Ltd is expected to generate 0.55 times more return on investment than GreenBank Capital. However, OFX Group Ltd is 1.81 times less risky than GreenBank Capital. It trades about 0.04 of its potential returns per unit of risk. GreenBank Capital is currently generating about -0.02 per unit of risk. If you would invest  440.00  in OFX Group Ltd on September 12, 2024 and sell it today you would lose (5.00) from holding OFX Group Ltd or give up 1.14% of portfolio value over 90 days.

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

OFX Group Ltd  vs.  GreenBank Capital

OFX Group

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in OFX Group Ltd are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, OFX Group showed solid returns over the last few months and may actually be approaching a breakup point.

GreenBank Capital

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GreenBank Capital has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's fundamental drivers remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with OFX Group and GreenBank Capital

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

The idea behind OFX Group Ltd and GreenBank Capital 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.