Correlation Between Oracle and Internet Thailand

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

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

Diversification Opportunities for Oracle and Internet Thailand

0.62

Correlation Coefficient

Oracle  Internet Thailand

Poor diversification

The 3 months correlation between Oracle and Internet is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Oracle and Internet Thailand Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Internet Thailand Public 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 Internet Thailand. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Internet Thailand Public has no effect on the direction of Oracle i.e., Oracle and Internet Thailand go up and down completely randomly.

Pair Corralation between Oracle and Internet Thailand

Given the investment horizon of 90 days Oracle is expected to generate 1.64 times less return on investment than Internet Thailand. But when comparing it to its historical volatility, Oracle is 2.46 times less risky than Internet Thailand. It trades about 0.19 of its potential returns per unit of risk. Internet Thailand Public is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  446.00  in Internet Thailand Public on September 5, 2024 and sell it today you would earn a total of  184.00  from holding Internet Thailand Public or generate 41.26% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.44%
Values	Daily Returns

Oracle  vs.  Internet Thailand Public

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.

Internet Thailand Public

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Internet Thailand Public are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Internet Thailand disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Oracle and Internet Thailand

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

The idea behind Oracle and Internet Thailand Public 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..