Correlation Between Oracle and Eversafe Rubber

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

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

Diversification Opportunities for Oracle and Eversafe Rubber

0.53

Correlation Coefficient

Oracle  Eversafe Rubber

Very weak diversification

The 3 months correlation between Oracle and Eversafe is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Oracle and Eversafe Rubber Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eversafe Rubber Bhd 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 Eversafe Rubber. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eversafe Rubber Bhd has no effect on the direction of Oracle i.e., Oracle and Eversafe Rubber go up and down completely randomly.

Pair Corralation between Oracle and Eversafe Rubber

Given the investment horizon of 90 days Oracle is expected to under-perform the Eversafe Rubber. In addition to that, Oracle is 1.01 times more volatile than Eversafe Rubber Bhd. It trades about -0.07 of its total potential returns per unit of risk. Eversafe Rubber Bhd is currently generating about -0.02 per unit of volatility. If you would invest  15.00  in Eversafe Rubber Bhd on December 30, 2024 and sell it today you would lose (1.00) from holding Eversafe Rubber Bhd or give up 6.67% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	96.77%
Values	Daily Returns

Oracle  vs.  Eversafe Rubber Bhd

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 April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Eversafe Rubber Bhd

Risk-Adjusted Performance

Very Weak

Over the last 90 days Eversafe Rubber Bhd has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Eversafe Rubber is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Oracle and Eversafe Rubber

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

The idea behind Oracle and Eversafe Rubber Bhd 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.