Correlation Between Oracle and SVELEV

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

By analyzing existing cross correlation between Oracle and SVELEV 25 10 FEB 41, you can compare the effects of market volatilities on Oracle and SVELEV 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 SVELEV. Check out your portfolio center. Please also check ongoing floating volatility patterns of Oracle and SVELEV.

Diversification Opportunities for Oracle and SVELEV

-0.37

Correlation Coefficient

Oracle  SVELEV

Very good diversification

The 3 months correlation between Oracle and SVELEV is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Oracle and SVELEV 25 10 FEB 41 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SVELEV 25 10 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 SVELEV. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SVELEV 25 10 has no effect on the direction of Oracle i.e., Oracle and SVELEV go up and down completely randomly.

Pair Corralation between Oracle and SVELEV

Given the investment horizon of 90 days Oracle is expected to generate 2.8 times more return on investment than SVELEV. However, Oracle is 2.8 times more volatile than SVELEV 25 10 FEB 41. It trades about -0.03 of its potential returns per unit of risk. SVELEV 25 10 FEB 41 is currently generating about -0.09 per unit of risk. If you would invest  18,094  in Oracle on December 2, 2024 and sell it today you would lose (1,488) from holding Oracle or give up 8.22% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	63.93%
Values	Daily Returns

Oracle  vs.  SVELEV 25 10 FEB 41

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.

SVELEV 25 10

Risk-Adjusted Performance

Very Weak

Over the last 90 days SVELEV 25 10 FEB 41 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, SVELEV is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Oracle and SVELEV

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

The idea behind Oracle and SVELEV 25 10 FEB 41 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.