Correlation Between Oracle and Thyssenkrupp
Can any of the company-specific risk be diversified away by investing in both Oracle and Thyssenkrupp 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 Thyssenkrupp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Oracle and Thyssenkrupp AG ON, you can compare the effects of market volatilities on Oracle and Thyssenkrupp 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 Thyssenkrupp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Oracle and Thyssenkrupp.
Diversification Opportunities for Oracle and Thyssenkrupp
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Oracle and Thyssenkrupp is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Oracle and Thyssenkrupp AG ON in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thyssenkrupp AG ON 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 Thyssenkrupp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thyssenkrupp AG ON has no effect on the direction of Oracle i.e., Oracle and Thyssenkrupp go up and down completely randomly.
Pair Corralation between Oracle and Thyssenkrupp
Given the investment horizon of 90 days Oracle is expected to under-perform the Thyssenkrupp. But the stock apears to be less risky and, when comparing its historical volatility, Oracle is 1.21 times less risky than Thyssenkrupp. The stock trades about -0.12 of its potential returns per unit of risk. The Thyssenkrupp AG ON is currently generating about 0.38 of returns per unit of risk over similar time horizon. If you would invest 336.00 in Thyssenkrupp AG ON on September 12, 2024 and sell it today you would earn a total of 83.00 from holding Thyssenkrupp AG ON or generate 24.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Oracle vs. Thyssenkrupp AG ON
Performance |
| Timeline |
| Oracle |
| Thyssenkrupp AG ON |
Oracle and Thyssenkrupp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Oracle and Thyssenkrupp
The main advantage of trading using opposite Oracle and Thyssenkrupp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Oracle position performs unexpectedly, Thyssenkrupp 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 Thyssenkrupp will offset losses from the drop in Thyssenkrupp's long position.| Oracle vs. Palo Alto Networks | Oracle vs. Crowdstrike Holdings | Oracle vs. Microsoft | Oracle vs. Block Inc |
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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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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