Correlation Between Tata Investment and Oracle Financial

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

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

Diversification Opportunities for Tata Investment and Oracle Financial

0.64

Correlation Coefficient

Tata Investment  Oracle Financial

Poor diversification

The 3 months correlation between Tata and Oracle is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Tata Investment and Oracle Financial Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oracle Financial Services and Tata Investment 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 Tata Investment are associated (or correlated) with Oracle Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oracle Financial Services has no effect on the direction of Tata Investment i.e., Tata Investment and Oracle Financial go up and down completely randomly.

Pair Corralation between Tata Investment and Oracle Financial

Assuming the 90 days trading horizon Tata Investment is expected to under-perform the Oracle Financial. In addition to that, Tata Investment is 1.42 times more volatile than Oracle Financial Services. It trades about -0.06 of its total potential returns per unit of risk. Oracle Financial Services is currently generating about -0.05 per unit of volatility. If you would invest  917,000  in Oracle Financial Services on April 8, 2025 and sell it today you would lose (16,500) from holding Oracle Financial Services or give up 1.8% of portfolio value over 90 days.

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

Tata Investment  vs.  Oracle Financial Services

Tata Investment

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Tata Investment are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly inconsistent technical and fundamental indicators, Tata Investment may actually be approaching a critical reversion point that can send shares even higher in August 2025.

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 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Oracle Financial unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Tata Investment and Oracle Financial

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

The idea behind Tata Investment and Oracle Financial Services 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.