Correlation Between Oracle and RENN Fund

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

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

Diversification Opportunities for Oracle and RENN Fund

0.79

Correlation Coefficient

Oracle  RENN Fund

Poor diversification

The 3 months correlation between Oracle and RENN is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Oracle and RENN Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RENN Fund 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 RENN Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RENN Fund has no effect on the direction of Oracle i.e., Oracle and RENN Fund go up and down completely randomly.

Pair Corralation between Oracle and RENN Fund

Given the investment horizon of 90 days Oracle is expected to generate 1.72 times less return on investment than RENN Fund. But when comparing it to its historical volatility, Oracle is 1.83 times less risky than RENN Fund. It trades about 0.16 of its potential returns per unit of risk. RENN Fund is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  194.00  in RENN Fund on September 12, 2024 and sell it today you would earn a total of  61.00  from holding RENN Fund or generate 31.44% return on investment over 90 days.

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

Oracle  vs.  RENN Fund

Oracle

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Oracle are ranked lower than 12 (%) 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.

RENN Fund

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in RENN Fund are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak fundamental indicators, RENN Fund reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Oracle and RENN Fund

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

The idea behind Oracle and RENN Fund 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.