Correlation Between Oracle and Bio Techne

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

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

Diversification Opportunities for Oracle and Bio Techne

-0.01

Correlation Coefficient

Oracle  Bio Techne

Good diversification

The 3 months correlation between Oracle and Bio is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Oracle and Bio Techne in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bio Techne 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 Bio Techne. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bio Techne has no effect on the direction of Oracle i.e., Oracle and Bio Techne go up and down completely randomly.

Pair Corralation between Oracle and Bio Techne

Assuming the 90 days trading horizon Oracle is expected to generate 0.72 times more return on investment than Bio Techne. However, Oracle is 1.38 times less risky than Bio Techne. It trades about 0.11 of its potential returns per unit of risk. Bio Techne is currently generating about 0.04 per unit of risk. If you would invest  13,131  in Oracle on September 29, 2024 and sell it today you would earn a total of  4,469  from holding Oracle or generate 34.03% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.21%
Values	Daily Returns

Oracle  vs.  Bio Techne

Oracle

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Oracle are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak fundamental indicators, Oracle sustained solid returns over the last few months and may actually be approaching a breakup point.

Bio Techne

Risk-Adjusted Performance

2 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Bio Techne are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak fundamental indicators, Bio Techne may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Oracle and Bio Techne

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

The idea behind Oracle and Bio Techne 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.