Correlation Between Oracle and Maritime Resources

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

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

Diversification Opportunities for Oracle and Maritime Resources

0.71

Correlation Coefficient

Oracle  Maritime Resources

Poor diversification

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

Pair Corralation between Oracle and Maritime Resources

Given the investment horizon of 90 days Oracle is expected to generate 1.87 times less return on investment than Maritime Resources. But when comparing it to its historical volatility, Oracle is 2.71 times less risky than Maritime Resources. It trades about 0.22 of its potential returns per unit of risk. Maritime Resources Corp is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  3.50  in Maritime Resources Corp on September 3, 2024 and sell it today you would earn a total of  2.00  from holding Maritime Resources Corp or generate 57.14% return on investment over 90 days.

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

Oracle  vs.  Maritime Resources Corp

Oracle

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Oracle are ranked lower than 17 (%) 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.

Maritime Resources Corp

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Maritime Resources Corp are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Maritime Resources showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Oracle and Maritime Resources

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

The idea behind Oracle and Maritime Resources Corp 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.