Correlation Between Oakley Capital and Auction Technology

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

By analyzing existing cross correlation between Oakley Capital Investments and Auction Technology Group, you can compare the effects of market volatilities on Oakley Capital and Auction Technology 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 Oakley Capital with a short position of Auction Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Oakley Capital and Auction Technology.

Diversification Opportunities for Oakley Capital and Auction Technology

-0.31

Correlation Coefficient

Oakley Capital  Auction Technology

Very good diversification

The 3 months correlation between Oakley and Auction is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Oakley Capital Investments and Auction Technology Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Auction Technology and Oakley Capital 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 Oakley Capital Investments are associated (or correlated) with Auction Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Auction Technology has no effect on the direction of Oakley Capital i.e., Oakley Capital and Auction Technology go up and down completely randomly.

Pair Corralation between Oakley Capital and Auction Technology

Assuming the 90 days trading horizon Oakley Capital Investments is expected to generate 0.76 times more return on investment than Auction Technology. However, Oakley Capital Investments is 1.32 times less risky than Auction Technology. It trades about 0.11 of its potential returns per unit of risk. Auction Technology Group is currently generating about 0.07 per unit of risk. If you would invest  48,200  in Oakley Capital Investments on September 29, 2024 and sell it today you would earn a total of  1,700  from holding Oakley Capital Investments or generate 3.53% return on investment over 90 days.

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

Oakley Capital Investments  vs.  Auction Technology Group

Oakley Capital Inves

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Oakley Capital Investments has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Oakley Capital is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Auction Technology

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Auction Technology Group are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Auction Technology exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Oakley Capital and Auction Technology

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

The idea behind Oakley Capital Investments and Auction Technology Group 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.