Correlation Between Oracle and Lucibel

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

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

Diversification Opportunities for Oracle and Lucibel

-0.08

Correlation Coefficient

Oracle  Lucibel

Good diversification

The 3 months correlation between Oracle and Lucibel is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Oracle and Lucibel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lucibel 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 Lucibel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lucibel has no effect on the direction of Oracle i.e., Oracle and Lucibel go up and down completely randomly.

Pair Corralation between Oracle and Lucibel

Given the investment horizon of 90 days Oracle is expected to under-perform the Lucibel. But the stock apears to be less risky and, when comparing its historical volatility, Oracle is 2.47 times less risky than Lucibel. The stock trades about -0.03 of its potential returns per unit of risk. The Lucibel is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  13.00  in Lucibel on December 2, 2024 and sell it today you would lose (2.00) from holding Lucibel or give up 15.38% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	96.83%
Values	Daily Returns

Oracle  vs.  Lucibel

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.

Lucibel

Risk-Adjusted Performance

Very Weak

Over the last 90 days Lucibel has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Lucibel is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Oracle and Lucibel

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

The idea behind Oracle and Lucibel 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..