Correlation Between Oracle and Powertap Hydrogen

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

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

Diversification Opportunities for Oracle and Powertap Hydrogen

0.3

Correlation Coefficient

Oracle  Powertap Hydrogen

Weak diversification

The 3 months correlation between Oracle and Powertap is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Oracle and Powertap Hydrogen Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Powertap Hydrogen Capital 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 Powertap Hydrogen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Powertap Hydrogen Capital has no effect on the direction of Oracle i.e., Oracle and Powertap Hydrogen go up and down completely randomly.

Pair Corralation between Oracle and Powertap Hydrogen

Given the investment horizon of 90 days Oracle is expected to generate 0.26 times more return on investment than Powertap Hydrogen. However, Oracle is 3.92 times less risky than Powertap Hydrogen. It trades about -0.07 of its potential returns per unit of risk. Powertap Hydrogen Capital is currently generating about -0.13 per unit of risk. If you would invest  16,648  in Oracle on December 29, 2024 and sell it today you would lose (2,561) from holding Oracle or give up 15.38% of portfolio value over 90 days.

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

Oracle  vs.  Powertap Hydrogen Capital

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 abnormal performance in the last few months, the Stock's fundamental indicators remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Powertap Hydrogen Capital

Risk-Adjusted Performance

Very Weak

Over the last 90 days Powertap Hydrogen Capital has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Oracle and Powertap Hydrogen

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

The idea behind Oracle and Powertap Hydrogen Capital 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.