Correlation Between Oracle and Xinjiang Zhongtai

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

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

Diversification Opportunities for Oracle and Xinjiang Zhongtai

-0.28

Correlation Coefficient

Oracle  Xinjiang Zhongtai

Very good diversification

The 3 months correlation between Oracle and Xinjiang is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Oracle and Xinjiang Zhongtai Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xinjiang Zhongtai and Oracle 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 are associated (or correlated) with Xinjiang Zhongtai. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xinjiang Zhongtai has no effect on the direction of Oracle i.e., Oracle and Xinjiang Zhongtai go up and down completely randomly.

Pair Corralation between Oracle and Xinjiang Zhongtai

Given the investment horizon of 90 days Oracle is expected to under-perform the Xinjiang Zhongtai. In addition to that, Oracle is 2.94 times more volatile than Xinjiang Zhongtai Chemical. It trades about -0.07 of its total potential returns per unit of risk. Xinjiang Zhongtai Chemical is currently generating about 0.1 per unit of volatility. If you would invest  431.00  in Xinjiang Zhongtai Chemical on December 31, 2024 and sell it today you would earn a total of  26.00  from holding Xinjiang Zhongtai Chemical or generate 6.03% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.08%
Values	Daily Returns

Oracle  vs.  Xinjiang Zhongtai Chemical

Oracle

Risk-Adjusted Performance

Very Weak

Over the last 90 days Oracle has generated negative risk-adjusted returns adding no value to investors with long positions. Despite abnormal performance in the last few months, the Stock's fundamental indicators remain quite persistent which may send shares a bit higher in May 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Xinjiang Zhongtai

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Xinjiang Zhongtai Chemical are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Xinjiang Zhongtai may actually be approaching a critical reversion point that can send shares even higher in May 2025.

Pair Trading with Oracle and Xinjiang Zhongtai

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

The idea behind Oracle and Xinjiang Zhongtai Chemical 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.