Correlation Between Oracle and Grid Metals

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

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

Diversification Opportunities for Oracle and Grid Metals

-0.45

Correlation Coefficient

Oracle  Grid Metals

Very good diversification

The 3 months correlation between Oracle and Grid is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Oracle and Grid Metals Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grid Metals 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 Grid Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grid Metals Corp has no effect on the direction of Oracle i.e., Oracle and Grid Metals go up and down completely randomly.

Pair Corralation between Oracle and Grid Metals

Given the investment horizon of 90 days Oracle is expected to under-perform the Grid Metals. But the stock apears to be less risky and, when comparing its historical volatility, Oracle is 2.16 times less risky than Grid Metals. The stock trades about -0.05 of its potential returns per unit of risk. The Grid Metals Corp is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  2.55  in Grid Metals Corp on December 28, 2024 and sell it today you would earn a total of  0.13  from holding Grid Metals Corp or generate 5.1% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.36%
Values	Daily Returns

Oracle  vs.  Grid Metals Corp

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.

Grid Metals Corp

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Grid Metals Corp are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, Grid Metals reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Oracle and Grid Metals

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

The idea behind Oracle and Grid Metals 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.

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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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.