Correlation Between Oracle and Eastparc Hotel

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

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

Diversification Opportunities for Oracle and Eastparc Hotel

-0.71

Correlation Coefficient

Oracle  Eastparc Hotel

Pay attention - limited upside

The 3 months correlation between Oracle and Eastparc is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Oracle and Eastparc Hotel Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eastparc Hotel 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 Eastparc Hotel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eastparc Hotel Tbk has no effect on the direction of Oracle i.e., Oracle and Eastparc Hotel go up and down completely randomly.

Pair Corralation between Oracle and Eastparc Hotel

Given the investment horizon of 90 days Oracle is expected to generate 0.65 times more return on investment than Eastparc Hotel. However, Oracle is 1.53 times less risky than Eastparc Hotel. It trades about 0.19 of its potential returns per unit of risk. Eastparc Hotel Tbk is currently generating about -0.11 per unit of risk. If you would invest  16,959  in Oracle on September 4, 2024 and sell it today you would earn a total of  1,330  from holding Oracle or generate 7.84% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Oracle  vs.  Eastparc Hotel 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.

Eastparc Hotel Tbk

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Eastparc Hotel 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 Eastparc Hotel

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

The idea behind Oracle and Eastparc Hotel 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.