Correlation Between Oracle and Eminent Luggage

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

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

Diversification Opportunities for Oracle and Eminent Luggage

-0.73

Correlation Coefficient

Oracle  Eminent Luggage

Pay attention - limited upside

The 3 months correlation between Oracle and Eminent is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding Oracle and Eminent Luggage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eminent Luggage 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 Eminent Luggage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eminent Luggage has no effect on the direction of Oracle i.e., Oracle and Eminent Luggage go up and down completely randomly.

Pair Corralation between Oracle and Eminent Luggage

Given the investment horizon of 90 days Oracle is expected to generate 0.64 times more return on investment than Eminent Luggage. However, Oracle is 1.57 times less risky than Eminent Luggage. It trades about 0.1 of its potential returns per unit of risk. Eminent Luggage is currently generating about 0.03 per unit of risk. If you would invest  7,961  in Oracle on September 4, 2024 and sell it today you would earn a total of  10,180  from holding Oracle or generate 127.87% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	96.97%
Values	Daily Returns

Oracle  vs.  Eminent Luggage

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.

Eminent Luggage

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Eminent Luggage has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pair Trading with Oracle and Eminent Luggage

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

The idea behind Oracle and Eminent Luggage 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.