Correlation Between Oracle and Cemindo Gemilang

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

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

Diversification Opportunities for Oracle and Cemindo Gemilang

-0.65

Correlation Coefficient

Oracle  Cemindo Gemilang

Excellent diversification

The 3 months correlation between Oracle and Cemindo is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Oracle and Cemindo Gemilang Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cemindo Gemilang Tbk 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 Cemindo Gemilang. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cemindo Gemilang Tbk has no effect on the direction of Oracle i.e., Oracle and Cemindo Gemilang go up and down completely randomly.

Pair Corralation between Oracle and Cemindo Gemilang

Given the investment horizon of 90 days Oracle is expected to generate 1.1 times more return on investment than Cemindo Gemilang. However, Oracle is 1.1 times more volatile than Cemindo Gemilang Tbk. It trades about 0.19 of its potential returns per unit of risk. Cemindo Gemilang Tbk is currently generating about -0.07 per unit of risk. If you would invest  14,043  in Oracle on September 4, 2024 and sell it today you would earn a total of  4,098  from holding Oracle or generate 29.18% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.44%
Values	Daily Returns

Oracle  vs.  Cemindo Gemilang Tbk

Oracle

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Oracle are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite quite abnormal fundamental indicators, Oracle disclosed solid returns over the last few months and may actually be approaching a breakup point.

Cemindo Gemilang Tbk

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cemindo Gemilang Tbk has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's forward-looking signals remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with Oracle and Cemindo Gemilang

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

The idea behind Oracle and Cemindo Gemilang Tbk 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.