Correlation Between Oracle and Standard Bank

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

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

Diversification Opportunities for Oracle and Standard Bank

-0.57

Correlation Coefficient

Oracle  Standard Bank

Excellent diversification

The 3 months correlation between Oracle and Standard is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Oracle and Standard Bank Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Standard Bank Group 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 Standard Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Standard Bank Group has no effect on the direction of Oracle i.e., Oracle and Standard Bank go up and down completely randomly.

Pair Corralation between Oracle and Standard Bank

Given the investment horizon of 90 days Oracle is expected to under-perform the Standard Bank. But the stock apears to be less risky and, when comparing its historical volatility, Oracle is 1.43 times less risky than Standard Bank. The stock trades about -0.39 of its potential returns per unit of risk. The Standard Bank Group is currently generating about -0.18 of returns per unit of risk over similar time horizon. If you would invest  955.00  in Standard Bank Group on January 25, 2024 and sell it today you would lose (54.00) from holding Standard Bank Group or give up 5.65% of portfolio value over 90 days.

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

Oracle  vs.  Standard Bank Group

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 latest stock price mess, may contribute to short-term losses for the institutional investors.

Standard Bank Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Standard Bank Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's essential indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Oracle and Standard Bank

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

The idea behind Oracle and Standard Bank Group 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.