Correlation Between Santos Brasil and Oracle

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

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

Diversification Opportunities for Santos Brasil and Oracle

0.92

Correlation Coefficient

Santos Brasil  Oracle

Almost no diversification

The 3 months correlation between Santos and Oracle is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Santos Brasil Participaes and Oracle in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oracle and Santos Brasil 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 Santos Brasil Participaes are associated (or correlated) with Oracle. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oracle has no effect on the direction of Santos Brasil i.e., Santos Brasil and Oracle go up and down completely randomly.

Pair Corralation between Santos Brasil and Oracle

Assuming the 90 days trading horizon Santos Brasil is expected to generate 21.24 times less return on investment than Oracle. But when comparing it to its historical volatility, Santos Brasil Participaes is 12.79 times less risky than Oracle. It trades about 0.22 of its potential returns per unit of risk. Oracle is currently generating about 0.37 of returns per unit of risk over similar time horizon. If you would invest  12,043  in Oracle on April 21, 2025 and sell it today you would earn a total of  10,895  from holding Oracle or generate 90.47% return on investment over 90 days.

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

Santos Brasil Participaes  vs.  Oracle

Santos Brasil Participaes

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Santos Brasil Participaes are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Santos Brasil is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Oracle

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Oracle are ranked lower than 28 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak fundamental indicators, Oracle sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Santos Brasil and Oracle

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

The idea behind Santos Brasil Participaes and Oracle 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.