Correlation Between OFAL and Professional Diversity

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

By analyzing existing cross correlation between OFAL and Professional Diversity Network, you can compare the effects of market volatilities on OFAL and Professional Diversity 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 OFAL with a short position of Professional Diversity. Check out your portfolio center. Please also check ongoing floating volatility patterns of OFAL and Professional Diversity.

Diversification Opportunities for OFAL and Professional Diversity

-0.38

Correlation Coefficient

OFAL  Professional Diversity

Very good diversification

The 3 months correlation between OFAL and Professional is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding OFAL and Professional Diversity Network in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Professional Diversity and OFAL 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 OFAL are associated (or correlated) with Professional Diversity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Professional Diversity has no effect on the direction of OFAL i.e., OFAL and Professional Diversity go up and down completely randomly.

Pair Corralation between OFAL and Professional Diversity

Given the investment horizon of 90 days OFAL is expected to under-perform the Professional Diversity. But the stock apears to be less risky and, when comparing its historical volatility, OFAL is 1.06 times less risky than Professional Diversity. The stock trades about -0.08 of its potential returns per unit of risk. The Professional Diversity Network is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  153.00  in Professional Diversity Network on May 25, 2025 and sell it today you would earn a total of  61.00  from holding Professional Diversity Network or generate 39.87% return on investment over 90 days.

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

OFAL  vs.  Professional Diversity Network

OFAL

Risk-Adjusted Performance

Weakest

Over the last 90 days OFAL 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 basic indicators remain quite persistent which may send shares a bit higher in September 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Professional Diversity

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in Professional Diversity Network are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very weak fundamental indicators, Professional Diversity displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with OFAL and Professional Diversity

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

The idea behind OFAL and Professional Diversity Network 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.