Correlation Between Oracle and Teka Construction
Can any of the company-specific risk be diversified away by investing in both Oracle and Teka Construction 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 Teka Construction into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Oracle and Teka Construction PCL, you can compare the effects of market volatilities on Oracle and Teka Construction 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 Teka Construction. Check out your portfolio center. Please also check ongoing floating volatility patterns of Oracle and Teka Construction.
Diversification Opportunities for Oracle and Teka Construction
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Oracle and Teka is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Oracle and Teka Construction PCL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Teka Construction PCL 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 Teka Construction. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Teka Construction PCL has no effect on the direction of Oracle i.e., Oracle and Teka Construction go up and down completely randomly.
Pair Corralation between Oracle and Teka Construction
Given the investment horizon of 90 days Oracle is expected to generate 0.88 times more return on investment than Teka Construction. However, Oracle is 1.14 times less risky than Teka Construction. It trades about 0.16 of its potential returns per unit of risk. Teka Construction PCL is currently generating about 0.03 per unit of risk. If you would invest 11,774 in Oracle on September 3, 2024 and sell it today you would earn a total of 6,710 from holding Oracle or generate 56.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 97.95% |
| Values | Daily Returns |
Oracle vs. Teka Construction PCL
Performance |
| Timeline |
| Oracle |
| Teka Construction PCL |
Oracle and Teka Construction Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Oracle and Teka Construction
The main advantage of trading using opposite Oracle and Teka Construction positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Oracle position performs unexpectedly, Teka Construction 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 Teka Construction will offset losses from the drop in Teka Construction'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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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