Correlation Between Associated Capital and OFS Credit

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

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

Diversification Opportunities for Associated Capital and OFS Credit

0.88

Correlation Coefficient

Associated Capital  OFS Credit

Very poor diversification

The 3 months correlation between Associated and OFS is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Associated Capital Group and OFS Credit in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OFS Credit and Associated 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 Associated Capital Group are associated (or correlated) with OFS Credit. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OFS Credit has no effect on the direction of Associated Capital i.e., Associated Capital and OFS Credit go up and down completely randomly.

Pair Corralation between Associated Capital and OFS Credit

Allowing for the 90-day total investment horizon Associated Capital is expected to generate 8.22 times less return on investment than OFS Credit. In addition to that, Associated Capital is 2.43 times more volatile than OFS Credit. It trades about 0.0 of its total potential returns per unit of risk. OFS Credit is currently generating about 0.06 per unit of volatility. If you would invest  1,969  in OFS Credit on August 21, 2024 and sell it today you would earn a total of  416.00  from holding OFS Credit or generate 21.13% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	99.8%
Values	Daily Returns

Associated Capital Group  vs.  OFS Credit

Associated Capital

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Associated Capital Group are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain fundamental indicators, Associated Capital exhibited solid returns over the last few months and may actually be approaching a breakup point.

OFS Credit

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in OFS Credit are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy forward indicators, OFS Credit is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Associated Capital and OFS Credit

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

The idea behind Associated Capital Group and OFS Credit 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.