Correlation Between Oracle and Nanjing Medlander

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

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

Diversification Opportunities for Oracle and Nanjing Medlander

0.75

Correlation Coefficient

Oracle  Nanjing Medlander

Poor diversification

The 3 months correlation between Oracle and Nanjing is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Oracle and Nanjing Medlander Medical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nanjing Medlander Medical 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 Nanjing Medlander. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nanjing Medlander Medical has no effect on the direction of Oracle i.e., Oracle and Nanjing Medlander go up and down completely randomly.

Pair Corralation between Oracle and Nanjing Medlander

Given the investment horizon of 90 days Oracle is expected to generate 0.54 times more return on investment than Nanjing Medlander. However, Oracle is 1.84 times less risky than Nanjing Medlander. It trades about 0.1 of its potential returns per unit of risk. Nanjing Medlander Medical is currently generating about -0.05 per unit of risk. If you would invest  17,048  in Oracle on September 4, 2024 and sell it today you would earn a total of  1,093  from holding Oracle or generate 6.41% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	97.62%
Values	Daily Returns

Oracle  vs.  Nanjing Medlander Medical

Oracle

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Oracle are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite quite abnormal fundamental indicators, Oracle disclosed solid returns over the last few months and may actually be approaching a breakup point.

Nanjing Medlander Medical

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Nanjing Medlander Medical are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Nanjing Medlander sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Oracle and Nanjing Medlander

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

The idea behind Oracle and Nanjing Medlander Medical 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.