Correlation Between Oracle and DC Media

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

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

Diversification Opportunities for Oracle and DC Media

-0.07

Correlation Coefficient

Oracle  DC Media

Good diversification

The 3 months correlation between Oracle and 263720 is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Oracle and DC Media CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DC Media CoLtd 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 DC Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DC Media CoLtd has no effect on the direction of Oracle i.e., Oracle and DC Media go up and down completely randomly.

Pair Corralation between Oracle and DC Media

Given the investment horizon of 90 days Oracle is expected to under-perform the DC Media. In addition to that, Oracle is 1.18 times more volatile than DC Media CoLtd. It trades about -0.07 of its total potential returns per unit of risk. DC Media CoLtd is currently generating about -0.06 per unit of volatility. If you would invest  2,100,000  in DC Media CoLtd on December 30, 2024 and sell it today you would lose (230,000) from holding DC Media CoLtd or give up 10.95% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.16%
Values	Daily Returns

Oracle  vs.  DC Media CoLtd

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.

DC Media CoLtd

Risk-Adjusted Performance

Very Weak

Over the last 90 days DC Media CoLtd has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Oracle and DC Media

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

The idea behind Oracle and DC Media CoLtd 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.