Correlation Between CeoTronics and Oracle

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

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

Diversification Opportunities for CeoTronics and Oracle

-0.66

Correlation Coefficient

CeoTronics  Oracle

Excellent diversification

The 3 months correlation between CeoTronics and Oracle is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding CeoTronics AG and Oracle in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oracle and CeoTronics 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 CeoTronics AG are associated (or correlated) with Oracle. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oracle has no effect on the direction of CeoTronics i.e., CeoTronics and Oracle go up and down completely randomly.

Pair Corralation between CeoTronics and Oracle

Assuming the 90 days trading horizon CeoTronics AG is expected to generate 1.54 times more return on investment than Oracle. However, CeoTronics is 1.54 times more volatile than Oracle. It trades about 0.18 of its potential returns per unit of risk. Oracle is currently generating about -0.05 per unit of risk. If you would invest  580.00  in CeoTronics AG on December 25, 2024 and sell it today you would earn a total of  345.00  from holding CeoTronics AG or generate 59.48% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.36%
Values	Daily Returns

CeoTronics AG  vs.  Oracle

CeoTronics AG

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in CeoTronics AG are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain forward-looking signals, CeoTronics unveiled solid returns over the last few months and may actually be approaching a breakup point.

Oracle

Risk-Adjusted Performance

Very Weak

Over the last 90 days Oracle has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's fundamental indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with CeoTronics and Oracle

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

The idea behind CeoTronics AG and Oracle 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.

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 the Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.