Correlation Between Oracle and Cloud Technologies

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

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

Diversification Opportunities for Oracle and Cloud Technologies

0.33

Correlation Coefficient

Oracle  Cloud Technologies

Weak diversification

The 3 months correlation between Oracle and Cloud is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Oracle and Cloud Technologies SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cloud Technologies 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 Cloud Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cloud Technologies has no effect on the direction of Oracle i.e., Oracle and Cloud Technologies go up and down completely randomly.

Pair Corralation between Oracle and Cloud Technologies

Given the investment horizon of 90 days Oracle is expected to under-perform the Cloud Technologies. In addition to that, Oracle is 1.25 times more volatile than Cloud Technologies SA. It trades about -0.05 of its total potential returns per unit of risk. Cloud Technologies SA is currently generating about -0.01 per unit of volatility. If you would invest  4,200  in Cloud Technologies SA on December 29, 2024 and sell it today you would lose (150.00) from holding Cloud Technologies SA or give up 3.57% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.39%
Values	Daily Returns

Oracle  vs.  Cloud Technologies SA

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.

Cloud Technologies

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Oracle and Cloud Technologies

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

The idea behind Oracle and Cloud Technologies SA 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..