Correlation Between Oracle and Arcadia Minerals

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

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

Diversification Opportunities for Oracle and Arcadia Minerals

-0.05

Correlation Coefficient

Oracle  Arcadia Minerals

Good diversification

The 3 months correlation between Oracle and Arcadia is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Oracle and Arcadia Minerals Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arcadia Minerals 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 Arcadia Minerals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arcadia Minerals has no effect on the direction of Oracle i.e., Oracle and Arcadia Minerals go up and down completely randomly.

Pair Corralation between Oracle and Arcadia Minerals

Given the investment horizon of 90 days Oracle is expected to under-perform the Arcadia Minerals. But the stock apears to be less risky and, when comparing its historical volatility, Oracle is 1.09 times less risky than Arcadia Minerals. The stock trades about -0.05 of its potential returns per unit of risk. The Arcadia Minerals Ltd is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  1.90  in Arcadia Minerals Ltd on December 29, 2024 and sell it today you would earn a total of  0.10  from holding Arcadia Minerals Ltd or generate 5.26% return on investment over 90 days.

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

Oracle  vs.  Arcadia Minerals Ltd

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 latest abnormal performance, the Stock's fundamental indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Arcadia Minerals

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Arcadia Minerals Ltd are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Arcadia Minerals may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Oracle and Arcadia Minerals

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

The idea behind Oracle and Arcadia Minerals Ltd 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.

Check out your portfolio center.

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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.