Correlation Between Oracle Financial and Ortel Communications

Can any of the company-specific risk be diversified away by investing in both Oracle Financial and Ortel Communications 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 Ortel Communications 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 Ortel Communications Limited, you can compare the effects of market volatilities on Oracle Financial and Ortel Communications 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 Ortel Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of Oracle Financial and Ortel Communications.

Diversification Opportunities for Oracle Financial and Ortel Communications

0.62

Correlation Coefficient

Oracle Financial  Ortel Communications

Poor diversification

The 3 months correlation between Oracle and Ortel is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Oracle Financial Services and Ortel Communications Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ortel Communications 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 Ortel Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ortel Communications has no effect on the direction of Oracle Financial i.e., Oracle Financial and Ortel Communications go up and down completely randomly.

Pair Corralation between Oracle Financial and Ortel Communications

Assuming the 90 days trading horizon Oracle Financial is expected to generate 2.7 times less return on investment than Ortel Communications. But when comparing it to its historical volatility, Oracle Financial Services is 1.28 times less risky than Ortel Communications. It trades about 0.09 of its potential returns per unit of risk. Ortel Communications Limited is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  164.00  in Ortel Communications Limited on April 22, 2025 and sell it today you would earn a total of  55.00  from holding Ortel Communications Limited or generate 33.54% return on investment over 90 days.

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

Oracle Financial Services  vs.  Ortel Communications Limited

Oracle Financial Services

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Oracle Financial Services are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively inconsistent basic indicators, Oracle Financial may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Ortel Communications

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Ortel Communications Limited are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady basic indicators, Ortel Communications displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Oracle Financial and Ortel Communications

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

The idea behind Oracle Financial Services and Ortel Communications 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.

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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 Global Correlations module to find global opportunities by holding instruments from different markets.