Correlation Between Oracle and Nevada King

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

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

Diversification Opportunities for Oracle and Nevada King

-0.07

Correlation Coefficient

Oracle  Nevada King

Good diversification

The 3 months correlation between Oracle and Nevada is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Oracle and Nevada King Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nevada King Gold 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 Nevada King. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nevada King Gold has no effect on the direction of Oracle i.e., Oracle and Nevada King go up and down completely randomly.

Pair Corralation between Oracle and Nevada King

Given the investment horizon of 90 days Oracle is expected to generate 1.12 times more return on investment than Nevada King. However, Oracle is 1.12 times more volatile than Nevada King Gold. It trades about 0.02 of its potential returns per unit of risk. Nevada King Gold is currently generating about -0.13 per unit of risk. If you would invest  16,560  in Oracle on December 2, 2024 and sell it today you would earn a total of  46.00  from holding Oracle or generate 0.28% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.24%
Values	Daily Returns

Oracle  vs.  Nevada King Gold

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 quite persistent fundamental indicators, Oracle is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Nevada King Gold

Risk-Adjusted Performance

Very Weak

Over the last 90 days Nevada King Gold has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pair Trading with Oracle and Nevada King

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

The idea behind Oracle and Nevada King Gold 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.