Correlation Between Oracle and XinJiang GuoTong

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

By analyzing existing cross correlation between Oracle and XinJiang GuoTong Pipeline, you can compare the effects of market volatilities on Oracle and XinJiang GuoTong 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 GuoTong. Check out your portfolio center. Please also check ongoing floating volatility patterns of Oracle and XinJiang GuoTong.

Diversification Opportunities for Oracle and XinJiang GuoTong

0.2

Correlation Coefficient

Oracle  XinJiang GuoTong

Modest diversification

The 3 months correlation between Oracle and XinJiang is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Oracle and XinJiang GuoTong Pipeline in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on XinJiang GuoTong Pipeline 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 GuoTong. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of XinJiang GuoTong Pipeline has no effect on the direction of Oracle i.e., Oracle and XinJiang GuoTong go up and down completely randomly.

Pair Corralation between Oracle and XinJiang GuoTong

Given the investment horizon of 90 days Oracle is expected to under-perform the XinJiang GuoTong. But the stock apears to be less risky and, when comparing its historical volatility, Oracle is 1.22 times less risky than XinJiang GuoTong. The stock trades about -0.03 of its potential returns per unit of risk. The XinJiang GuoTong Pipeline is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  931.00  in XinJiang GuoTong Pipeline on December 2, 2024 and sell it today you would earn a total of  5.00  from holding XinJiang GuoTong Pipeline or generate 0.54% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	96.72%
Values	Daily Returns

Oracle  vs.  XinJiang GuoTong Pipeline

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 quite persistent fundamental indicators, Oracle is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

XinJiang GuoTong Pipeline

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in XinJiang GuoTong Pipeline are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, XinJiang GuoTong is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Oracle and XinJiang GuoTong

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

The idea behind Oracle and XinJiang GuoTong Pipeline 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.