Correlation Between Burford Capital and OCA Acquisition

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Can any of the company-specific risk be diversified away by investing in both Burford Capital and OCA Acquisition 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 Burford Capital and OCA Acquisition into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Burford Capital and OCA Acquisition Corp, you can compare the effects of market volatilities on Burford Capital and OCA Acquisition 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 Burford Capital with a short position of OCA Acquisition. Check out your portfolio center. Please also check ongoing floating volatility patterns of Burford Capital and OCA Acquisition.

Diversification Opportunities for Burford Capital and OCA Acquisition

0.25
  Correlation Coefficient

Modest diversification

The 3 months correlation between Burford and OCA Acquisition is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Burford Capital and OCA Acquisition Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OCA Acquisition Corp and Burford 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 Burford Capital are associated (or correlated) with OCA Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OCA Acquisition Corp has no effect on the direction of Burford Capital i.e., Burford Capital and OCA Acquisition go up and down completely randomly.

Pair Corralation between Burford Capital and OCA Acquisition

Considering the 90-day investment horizon Burford Capital is expected to under-perform the OCA Acquisition. In addition to that, Burford Capital is 12.86 times more volatile than OCA Acquisition Corp. It trades about -0.02 of its total potential returns per unit of risk. OCA Acquisition Corp is currently generating about 0.05 per unit of volatility. If you would invest  995.00  in OCA Acquisition Corp on September 2, 2022 and sell it today you would earn a total of  25.00  from holding OCA Acquisition Corp or generate 2.51% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Burford Capital  vs.  OCA Acquisition Corp

 Performance (%) 
       Timeline  
Burford Capital 
Burford Performance
2 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Burford Capital are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Burford Capital is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Burford Price Channel

OCA Acquisition Corp 
OCA Acquisition Performance
19 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in OCA Acquisition Corp are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, OCA Acquisition is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

OCA Acquisition Price Channel

Burford Capital and OCA Acquisition Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Burford Capital and OCA Acquisition

The main advantage of trading using opposite Burford Capital and OCA Acquisition positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Burford Capital position performs unexpectedly, OCA Acquisition 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 OCA Acquisition will offset losses from the drop in OCA Acquisition's long position.
Burford Capital vs. Chevron Corp
The idea behind Burford Capital and OCA Acquisition Corp 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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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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.

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