Correlation Between Oracle and Tritium DCFC

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

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

Diversification Opportunities for Oracle and Tritium DCFC

-0.41

Correlation Coefficient

Oracle  Tritium DCFC

Very good diversification

The 3 months correlation between Oracle and Tritium is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Oracle and Tritium DCFC Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tritium DCFC Limited 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 Tritium DCFC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tritium DCFC Limited has no effect on the direction of Oracle i.e., Oracle and Tritium DCFC go up and down completely randomly.

Pair Corralation between Oracle and Tritium DCFC

Given the investment horizon of 90 days Oracle is expected to generate 11.2 times less return on investment than Tritium DCFC. But when comparing it to its historical volatility, Oracle is 14.89 times less risky than Tritium DCFC. It trades about 0.1 of its potential returns per unit of risk. Tritium DCFC Limited is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  6.00  in Tritium DCFC Limited on September 4, 2024 and sell it today you would lose (4.20) from holding Tritium DCFC Limited or give up 70.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	39.68%
Values	Daily Returns

Oracle  vs.  Tritium DCFC Limited

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.

Tritium DCFC Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tritium DCFC Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable fundamental indicators, Tritium DCFC is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Oracle and Tritium DCFC

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

The idea behind Oracle and Tritium DCFC Limited 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.