Correlation Between GM Breweries and Oracle Financial

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

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

Diversification Opportunities for GM Breweries and Oracle Financial

0.45

Correlation Coefficient

GM Breweries  Oracle Financial

Very weak diversification

The 3 months correlation between GMBREW and Oracle is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding GM Breweries Limited and Oracle Financial Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oracle Financial Services and GM Breweries 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 GM Breweries Limited are associated (or correlated) with Oracle Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oracle Financial Services has no effect on the direction of GM Breweries i.e., GM Breweries and Oracle Financial go up and down completely randomly.

Pair Corralation between GM Breweries and Oracle Financial

Assuming the 90 days trading horizon GM Breweries Limited is expected to under-perform the Oracle Financial. In addition to that, GM Breweries is 1.35 times more volatile than Oracle Financial Services. It trades about -0.07 of its total potential returns per unit of risk. Oracle Financial Services is currently generating about -0.09 per unit of volatility. If you would invest  1,257,510  in Oracle Financial Services on October 10, 2024 and sell it today you would lose (42,825) from holding Oracle Financial Services or give up 3.41% of portfolio value over 90 days.

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

GM Breweries Limited  vs.  Oracle Financial Services

GM Breweries Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GM Breweries Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, GM Breweries is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Oracle Financial Services

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Oracle Financial Services are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Oracle Financial may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with GM Breweries and Oracle Financial

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

The idea behind GM Breweries Limited and Oracle Financial Services 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.