Correlation Between Oracle and Worldline

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

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

Diversification Opportunities for Oracle and Worldline

-0.35

Correlation Coefficient

Oracle  Worldline

Very good diversification

The 3 months correlation between Oracle and Worldline is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Oracle and Worldline SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Worldline 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 Worldline. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Worldline SA has no effect on the direction of Oracle i.e., Oracle and Worldline go up and down completely randomly.

Pair Corralation between Oracle and Worldline

Given the investment horizon of 90 days Oracle is expected to generate 0.39 times more return on investment than Worldline. However, Oracle is 2.56 times less risky than Worldline. It trades about 0.02 of its potential returns per unit of risk. Worldline SA is currently generating about 0.0 per unit of risk. If you would invest  16,543  in Oracle on September 24, 2024 and sell it today you would earn a total of  275.00  from holding Oracle or generate 1.66% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.46%
Values	Daily Returns

Oracle  vs.  Worldline SA

Oracle

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Oracle are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent fundamental indicators, Oracle is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Worldline SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Worldline SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Worldline is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Oracle and Worldline

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

The idea behind Oracle and Worldline 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.

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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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.