Correlation Between Oracle Financial and Oil India

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

By analyzing existing cross correlation between Oracle Financial Services and Oil India Limited, you can compare the effects of market volatilities on Oracle Financial and Oil India 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 Financial with a short position of Oil India. Check out your portfolio center. Please also check ongoing floating volatility patterns of Oracle Financial and Oil India.

Diversification Opportunities for Oracle Financial and Oil India

0.93

Correlation Coefficient

Oracle Financial  Oil India

Almost no diversification

The 3 months correlation between Oracle and Oil is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Oracle Financial Services and Oil India Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oil India Limited and Oracle Financial 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 Financial Services are associated (or correlated) with Oil India. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oil India Limited has no effect on the direction of Oracle Financial i.e., Oracle Financial and Oil India go up and down completely randomly.

Pair Corralation between Oracle Financial and Oil India

Assuming the 90 days trading horizon Oracle Financial Services is expected to generate 1.02 times more return on investment than Oil India. However, Oracle Financial is 1.02 times more volatile than Oil India Limited. It trades about 0.16 of its potential returns per unit of risk. Oil India Limited is currently generating about 0.11 per unit of risk. If you would invest  736,894  in Oracle Financial Services on March 29, 2025 and sell it today you would earn a total of  170,556  from holding Oracle Financial Services or generate 23.15% return on investment over 90 days.

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

Oracle Financial Services  vs.  Oil India Limited

Oracle Financial Services

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Oracle Financial Services are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating basic indicators, Oracle Financial unveiled solid returns over the last few months and may actually be approaching a breakup point.

Oil India Limited

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Oil India Limited are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Oil India exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Oracle Financial and Oil India

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

The idea behind Oracle Financial Services and Oil India Limited 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.

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 Stocks Directory module to find actively traded stocks across global markets.