Correlation Between Oracle and Premium Nickel

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

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

Diversification Opportunities for Oracle and Premium Nickel

-0.39

Correlation Coefficient

Oracle  Premium Nickel

Very good diversification

The 3 months correlation between Oracle and Premium is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Oracle and Premium Nickel Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Premium Nickel Resources 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 Premium Nickel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Premium Nickel Resources has no effect on the direction of Oracle i.e., Oracle and Premium Nickel go up and down completely randomly.

Pair Corralation between Oracle and Premium Nickel

Given the investment horizon of 90 days Oracle is expected to generate 0.42 times more return on investment than Premium Nickel. However, Oracle is 2.39 times less risky than Premium Nickel. It trades about 0.1 of its potential returns per unit of risk. Premium Nickel Resources is currently generating about -0.05 per unit of risk. If you would invest  11,374  in Oracle on September 4, 2024 and sell it today you would earn a total of  6,767  from holding Oracle or generate 59.5% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.6%
Values	Daily Returns

Oracle  vs.  Premium Nickel Resources

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.

Premium Nickel Resources

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Oracle and Premium Nickel

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

The idea behind Oracle and Premium Nickel Resources 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.