Correlation Between Oracle and Hotis Othon

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

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

Diversification Opportunities for Oracle and Hotis Othon

0.5

Correlation Coefficient

Oracle  Hotis Othon

Very weak diversification

The 3 months correlation between Oracle and Hotis is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Oracle and Hotis Othon SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hotis Othon SA 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 Hotis Othon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hotis Othon SA has no effect on the direction of Oracle i.e., Oracle and Hotis Othon go up and down completely randomly.

Pair Corralation between Oracle and Hotis Othon

Given the investment horizon of 90 days Oracle is expected to generate 1.16 times less return on investment than Hotis Othon. But when comparing it to its historical volatility, Oracle is 1.89 times less risky than Hotis Othon. It trades about 0.19 of its potential returns per unit of risk. Hotis Othon SA is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  229.00  in Hotis Othon SA on September 5, 2024 and sell it today you would earn a total of  18.00  from holding Hotis Othon SA or generate 7.86% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.45%
Values	Daily Returns

Oracle  vs.  Hotis Othon SA

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.

Hotis Othon SA

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Hotis Othon SA are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Hotis Othon may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Oracle and Hotis Othon

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

The idea behind Oracle and Hotis Othon SA 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.

Check out your portfolio center.

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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.