Correlation Between Oracle and ZW Data

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

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

Diversification Opportunities for Oracle and ZW Data

-0.33

Correlation Coefficient

Oracle  ZW Data

Very good diversification

The 3 months correlation between Oracle and CNET is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Oracle and ZW Data Action in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ZW Data Action 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 ZW Data. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ZW Data Action has no effect on the direction of Oracle i.e., Oracle and ZW Data go up and down completely randomly.

Pair Corralation between Oracle and ZW Data

Given the investment horizon of 90 days Oracle is expected to generate 0.43 times more return on investment than ZW Data. However, Oracle is 2.34 times less risky than ZW Data. It trades about 0.17 of its potential returns per unit of risk. ZW Data Action is currently generating about -0.05 per unit of risk. If you would invest  16,959  in Oracle on September 4, 2024 and sell it today you would earn a total of  1,182  from holding Oracle or generate 6.97% return on investment over 90 days.

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

Oracle  vs.  ZW Data Action

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.

ZW Data Action

Risk-Adjusted Performance

3 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in ZW Data Action are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady technical and fundamental indicators, ZW Data unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Oracle and ZW Data

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

The idea behind Oracle and ZW Data Action 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.