Correlation Between XRP and Oracle Japan

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

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

Diversification Opportunities for XRP and Oracle Japan

0.22

Correlation Coefficient

XRP  Oracle Japan

Modest diversification

The 3 months correlation between XRP and Oracle is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding XRP and Oracle Japan in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oracle Japan and XRP 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 XRP are associated (or correlated) with Oracle Japan. 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 XRP i.e., XRP and Oracle Japan go up and down completely randomly.

Pair Corralation between XRP and Oracle Japan

Assuming the 90 days trading horizon XRP is expected to generate 3.53 times more return on investment than Oracle Japan. However, XRP is 3.53 times more volatile than Oracle Japan. It trades about 0.13 of its potential returns per unit of risk. Oracle Japan is currently generating about 0.04 per unit of risk. If you would invest  41.00  in XRP on October 25, 2024 and sell it today you would earn a total of  276.00  from holding XRP or generate 673.17% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	59.28%
Values	Daily Returns

XRP  vs.  Oracle Japan

XRP

Risk-Adjusted Performance

31 of 100

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in XRP are ranked lower than 31 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, XRP exhibited solid returns over the last few months and may actually be approaching a breakup point.

Oracle Japan

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Oracle Japan are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Oracle Japan is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with XRP and Oracle Japan

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

The idea behind XRP 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.