Correlation Between Calibre Mining and OracleJapan

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

By analyzing existing cross correlation between Calibre Mining Corp and Oracle Japan, you can compare the effects of market volatilities on Calibre Mining and OracleJapan 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 Calibre Mining with a short position of OracleJapan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Calibre Mining and OracleJapan.

Diversification Opportunities for Calibre Mining and OracleJapan

0.01

Correlation Coefficient

Calibre Mining  OracleJapan

Significant diversification

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

Pair Corralation between Calibre Mining and OracleJapan

Assuming the 90 days trading horizon Calibre Mining Corp is expected to generate 1.7 times more return on investment than OracleJapan. However, Calibre Mining is 1.7 times more volatile than Oracle Japan. It trades about -0.01 of its potential returns per unit of risk. Oracle Japan is currently generating about -0.06 per unit of risk. If you would invest  163.00  in Calibre Mining Corp on October 10, 2024 and sell it today you would lose (2.00) from holding Calibre Mining Corp or give up 1.23% of portfolio value over 90 days.

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

Calibre Mining Corp  vs.  Oracle Japan

Calibre Mining Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Calibre Mining Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Oracle Japan

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Oracle Japan has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, OracleJapan is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Calibre Mining and OracleJapan

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

The idea behind Calibre Mining Corp and Oracle Japan 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.