Correlation Between Oracle and Sands Capital

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

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

Diversification Opportunities for Oracle and Sands Capital

0.85

Correlation Coefficient

Oracle  Sands Capital

Very poor diversification

The 3 months correlation between Oracle and Sands is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Oracle and Sands Capital Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sands Capital Global 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 Sands Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sands Capital Global has no effect on the direction of Oracle i.e., Oracle and Sands Capital go up and down completely randomly.

Pair Corralation between Oracle and Sands Capital

Given the investment horizon of 90 days Oracle is expected to generate 1.19 times less return on investment than Sands Capital. In addition to that, Oracle is 2.21 times more volatile than Sands Capital Global. It trades about 0.09 of its total potential returns per unit of risk. Sands Capital Global is currently generating about 0.24 per unit of volatility. If you would invest  3,010  in Sands Capital Global on September 12, 2024 and sell it today you would earn a total of  408.00  from holding Sands Capital Global or generate 13.55% return on investment over 90 days.

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

Oracle  vs.  Sands Capital Global

Oracle

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Oracle are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite quite abnormal fundamental indicators, Oracle may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Sands Capital Global

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Sands Capital Global are ranked lower than 18 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, Sands Capital showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Oracle and Sands Capital

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

The idea behind Oracle and Sands Capital Global 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.