Correlation Between Astar and OracleJapan

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

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

Diversification Opportunities for Astar and OracleJapan

0.48

Correlation Coefficient

Astar  OracleJapan

Very weak diversification

The 3 months correlation between Astar and OracleJapan is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Astar and Oracle Japan in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oracle Japan and Astar 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 Astar are associated (or correlated) with OracleJapan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oracle Japan has no effect on the direction of Astar i.e., Astar and OracleJapan go up and down completely randomly.

Pair Corralation between Astar and OracleJapan

Assuming the 90 days trading horizon Astar is expected to under-perform the OracleJapan. In addition to that, Astar is 2.89 times more volatile than Oracle Japan. It trades about -0.08 of its total potential returns per unit of risk. Oracle Japan is currently generating about -0.04 per unit of volatility. If you would invest  9,100  in Oracle Japan on October 10, 2024 and sell it today you would lose (150.00) from holding Oracle Japan or give up 1.65% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	80.95%
Values	Daily Returns

Astar  vs.  Oracle Japan

Astar

Risk-Adjusted Performance

3 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Astar are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, Astar exhibited solid returns over the last few months and may actually be approaching a breakup point.

Oracle Japan

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Oracle Japan are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, OracleJapan is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Astar and OracleJapan

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

The idea behind Astar and Oracle Japan 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.