Correlation Between OceanFirst Financial and Kibush Capital

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

Diversification Opportunities for OceanFirst Financial and Kibush Capital

-0.42
  Correlation Coefficient

Very good diversification

The 3 months correlation between OceanFirst and Kibush is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding OceanFirst Financial Corp and Kibush Capital Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kibush Capital Corp and OceanFirst Financial 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 OceanFirst Financial Corp are associated (or correlated) with Kibush Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kibush Capital Corp has no effect on the direction of OceanFirst Financial i.e., OceanFirst Financial and Kibush Capital go up and down completely randomly.

Pair Corralation between OceanFirst Financial and Kibush Capital

Given the investment horizon of 90 days OceanFirst Financial is expected to generate 6.16 times less return on investment than Kibush Capital. But when comparing it to its historical volatility, OceanFirst Financial Corp is 7.95 times less risky than Kibush Capital. It trades about 0.05 of its potential returns per unit of risk. Kibush Capital Corp is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  0.19  in Kibush Capital Corp on September 1, 2022 and sell it today you would lose (0.16)  from holding Kibush Capital Corp or give up 84.21% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

OceanFirst Financial Corp  vs.  Kibush Capital Corp

 Performance (%) 
       Timeline  
OceanFirst Financial Corp 
OceanFirst Performance
14 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in OceanFirst Financial Corp are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak technical and fundamental indicators, OceanFirst Financial sustained solid returns over the last few months and may actually be approaching a breakup point.

OceanFirst Price Channel

Kibush Capital Corp 
Kibush Performance
1 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Kibush Capital Corp are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak fundamental indicators, Kibush Capital reported solid returns over the last few months and may actually be approaching a breakup point.

Kibush Price Channel

OceanFirst Financial and Kibush Capital Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with OceanFirst Financial and Kibush Capital

The main advantage of trading using opposite OceanFirst Financial and Kibush Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if OceanFirst Financial position performs unexpectedly, Kibush 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 Kibush Capital will offset losses from the drop in Kibush Capital's long position.
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The idea behind OceanFirst Financial Corp and Kibush Capital 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.

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