Correlation Between Oracle and Virpax Pharmaceuticals

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

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

Diversification Opportunities for Oracle and Virpax Pharmaceuticals

-0.63

Correlation Coefficient

Oracle  Virpax Pharmaceuticals

Excellent diversification

The 3 months correlation between Oracle and Virpax is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Oracle and Virpax Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Virpax Pharmaceuticals 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 Virpax Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Virpax Pharmaceuticals has no effect on the direction of Oracle i.e., Oracle and Virpax Pharmaceuticals go up and down completely randomly.

Pair Corralation between Oracle and Virpax Pharmaceuticals

Given the investment horizon of 90 days Oracle is expected to generate 0.17 times more return on investment than Virpax Pharmaceuticals. However, Oracle is 5.78 times less risky than Virpax Pharmaceuticals. It trades about 0.1 of its potential returns per unit of risk. Virpax Pharmaceuticals is currently generating about -0.01 per unit of risk. If you would invest  11,374  in Oracle on September 4, 2024 and sell it today you would earn a total of  6,915  from holding Oracle or generate 60.8% return on investment over 90 days.

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

Oracle  vs.  Virpax Pharmaceuticals

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.

Virpax Pharmaceuticals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Virpax Pharmaceuticals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Oracle and Virpax Pharmaceuticals

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

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