Correlation Between Oracle and Capstone Copper

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

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

Diversification Opportunities for Oracle and Capstone Copper

0.35

Correlation Coefficient

Oracle  Capstone Copper

Weak diversification

The 3 months correlation between Oracle and Capstone is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Oracle and Capstone Copper Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capstone Copper Corp 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 Capstone Copper. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capstone Copper Corp has no effect on the direction of Oracle i.e., Oracle and Capstone Copper go up and down completely randomly.

Pair Corralation between Oracle and Capstone Copper

Given the investment horizon of 90 days Oracle is expected to generate 0.71 times more return on investment than Capstone Copper. However, Oracle is 1.41 times less risky than Capstone Copper. It trades about 0.19 of its potential returns per unit of risk. Capstone Copper Corp is currently generating about 0.06 per unit of risk. If you would invest  14,229  in Oracle on September 5, 2024 and sell it today you would earn a total of  4,060  from holding Oracle or generate 28.53% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Oracle  vs.  Capstone Copper Corp

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.

Capstone Copper Corp

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Capstone Copper Corp are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating fundamental indicators, Capstone Copper may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Oracle and Capstone Copper

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

The idea behind Oracle and Capstone Copper Corp 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.