Correlation Between Cairn Homes and Oxford Technology
Can any of the company-specific risk be diversified away by investing in both Cairn Homes and Oxford Technology 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 Cairn Homes and Oxford Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cairn Homes PLC and Oxford Technology 2, you can compare the effects of market volatilities on Cairn Homes and Oxford Technology 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 Cairn Homes with a short position of Oxford Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cairn Homes and Oxford Technology.
Diversification Opportunities for Cairn Homes and Oxford Technology
-0.04 | Correlation Coefficient |
Good diversification
The 3 months correlation between Cairn and Oxford is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Cairn Homes PLC and Oxford Technology 2 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oxford Technology and Cairn Homes 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 Cairn Homes PLC are associated (or correlated) with Oxford Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oxford Technology has no effect on the direction of Cairn Homes i.e., Cairn Homes and Oxford Technology go up and down completely randomly.
Pair Corralation between Cairn Homes and Oxford Technology
Assuming the 90 days trading horizon Cairn Homes PLC is expected to generate 0.85 times more return on investment than Oxford Technology. However, Cairn Homes PLC is 1.18 times less risky than Oxford Technology. It trades about -0.06 of its potential returns per unit of risk. Oxford Technology 2 is currently generating about -0.21 per unit of risk. If you would invest 19,440 in Cairn Homes PLC on November 7, 2024 and sell it today you would lose (560.00) from holding Cairn Homes PLC or give up 2.88% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cairn Homes PLC vs. Oxford Technology 2
Performance |
| Timeline |
| Cairn Homes PLC |
| Oxford Technology |
Cairn Homes and Oxford Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cairn Homes and Oxford Technology
The main advantage of trading using opposite Cairn Homes and Oxford Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cairn Homes position performs unexpectedly, Oxford Technology 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 Oxford Technology will offset losses from the drop in Oxford Technology's long position.| Cairn Homes vs. Universal Health Services | Cairn Homes vs. Naturhouse Health SA | Cairn Homes vs. EJF Investments | Cairn Homes vs. Cardinal Health |
| Oxford Technology vs. LPKF Laser Electronics | Oxford Technology vs. Universal Display Corp | Oxford Technology vs. United Internet AG | Oxford Technology vs. Golden Metal Resources |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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