Correlation Between Oceana and CoreShares Preference

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

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

Diversification Opportunities for Oceana and CoreShares Preference

0.0

Correlation Coefficient

Oceana  CoreShares Preference

Pay attention - limited upside

The 3 months correlation between Oceana and CoreShares is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Oceana and CoreShares Preference Share in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CoreShares Preference and Oceana 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 Oceana are associated (or correlated) with CoreShares Preference. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CoreShares Preference has no effect on the direction of Oceana i.e., Oceana and CoreShares Preference go up and down completely randomly.

Pair Corralation between Oceana and CoreShares Preference

Assuming the 90 days trading horizon Oceana is expected to generate 2.85 times less return on investment than CoreShares Preference. In addition to that, Oceana is 3.99 times more volatile than CoreShares Preference Share. It trades about 0.01 of its total potential returns per unit of risk. CoreShares Preference Share is currently generating about 0.11 per unit of volatility. If you would invest  89,972  in CoreShares Preference Share on September 12, 2024 and sell it today you would earn a total of  8,528  from holding CoreShares Preference Share or generate 9.48% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	99.6%
Values	Daily Returns

Oceana  vs.  CoreShares Preference Share

Oceana

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Oceana are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Oceana is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

CoreShares Preference

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CoreShares Preference Share has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong technical and fundamental indicators, CoreShares Preference is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Oceana and CoreShares Preference

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

The idea behind Oceana and CoreShares Preference Share 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.