Correlation Between Oracle Financial and Fortis Healthcare

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

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

Diversification Opportunities for Oracle Financial and Fortis Healthcare

0.67

Correlation Coefficient

Oracle Financial  Fortis Healthcare

Poor diversification

The 3 months correlation between Oracle and Fortis is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Oracle Financial Services and Fortis Healthcare Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fortis Healthcare and Oracle Financial 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 Oracle Financial Services are associated (or correlated) with Fortis Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fortis Healthcare has no effect on the direction of Oracle Financial i.e., Oracle Financial and Fortis Healthcare go up and down completely randomly.

Pair Corralation between Oracle Financial and Fortis Healthcare

Assuming the 90 days trading horizon Oracle Financial Services is expected to under-perform the Fortis Healthcare. But the stock apears to be less risky and, when comparing its historical volatility, Oracle Financial Services is 1.27 times less risky than Fortis Healthcare. The stock trades about -0.55 of its potential returns per unit of risk. The Fortis Healthcare Limited is currently generating about -0.1 of returns per unit of risk over similar time horizon. If you would invest  67,890  in Fortis Healthcare Limited on October 22, 2024 and sell it today you would lose (3,440) from holding Fortis Healthcare Limited or give up 5.07% of portfolio value over 90 days.

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

Oracle Financial Services  vs.  Fortis Healthcare Limited

Oracle Financial Services

Risk-Adjusted Performance

0 of 100

Very Weak

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

Fortis Healthcare

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Fortis Healthcare Limited are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unsteady basic indicators, Fortis Healthcare may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Oracle Financial and Fortis Healthcare

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

The idea behind Oracle Financial Services and Fortis Healthcare Limited 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.