Correlation Between ITI and Oil Country

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

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

Diversification Opportunities for ITI and Oil Country

-0.15

Correlation Coefficient

ITI  Oil Country

Good diversification

The 3 months correlation between ITI and Oil is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding ITI Limited and Oil Country Tubular in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oil Country Tubular and ITI 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 ITI Limited are associated (or correlated) with Oil Country. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oil Country Tubular has no effect on the direction of ITI i.e., ITI and Oil Country go up and down completely randomly.

Pair Corralation between ITI and Oil Country

Assuming the 90 days trading horizon ITI Limited is expected to under-perform the Oil Country. In addition to that, ITI is 1.36 times more volatile than Oil Country Tubular. It trades about -0.05 of its total potential returns per unit of risk. Oil Country Tubular is currently generating about 0.12 per unit of volatility. If you would invest  6,047  in Oil Country Tubular on December 22, 2024 and sell it today you would earn a total of  1,719  from holding Oil Country Tubular or generate 28.43% return on investment over 90 days.

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

ITI Limited  vs.  Oil Country Tubular

ITI Limited

Risk-Adjusted Performance

Very Weak

Over the last 90 days ITI Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Oil Country Tubular

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Oil Country Tubular are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Oil Country displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ITI and Oil Country

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

The idea behind ITI Limited and Oil Country Tubular 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.