Correlation Between Oracle Financial and Oil Natural

Can any of the company-specific risk be diversified away by investing in both Oracle Financial and Oil Natural 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 Oil Natural 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 Oil Natural Gas, you can compare the effects of market volatilities on Oracle Financial and Oil Natural 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 Oil Natural. Check out your portfolio center. Please also check ongoing floating volatility patterns of Oracle Financial and Oil Natural.

Diversification Opportunities for Oracle Financial and Oil Natural

-0.49

Correlation Coefficient

Oracle Financial  Oil Natural

Very good diversification

The 3 months correlation between Oracle and Oil is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Oracle Financial Services and Oil Natural Gas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oil Natural Gas 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 Oil Natural. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oil Natural Gas has no effect on the direction of Oracle Financial i.e., Oracle Financial and Oil Natural go up and down completely randomly.

Pair Corralation between Oracle Financial and Oil Natural

Assuming the 90 days trading horizon Oracle Financial Services is expected to generate 1.03 times more return on investment than Oil Natural. However, Oracle Financial is 1.03 times more volatile than Oil Natural Gas. It trades about 0.08 of its potential returns per unit of risk. Oil Natural Gas is currently generating about 0.03 per unit of risk. If you would invest  643,166  in Oracle Financial Services on October 24, 2024 and sell it today you would earn a total of  333,424  from holding Oracle Financial Services or generate 51.84% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	99.59%
Values	Daily Returns

Oracle Financial Services  vs.  Oil Natural Gas

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 weak 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.

Oil Natural Gas

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Oil Natural Gas are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Oil Natural is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Oracle Financial and Oil Natural

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

The idea behind Oracle Financial Services and Oil Natural Gas 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 Commodity Directory module to find actively traded commodities issued by global exchanges.