Correlation Between AWILCO DRILLING and SMA Solar
Can any of the company-specific risk be diversified away by investing in both AWILCO DRILLING and SMA Solar 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 AWILCO DRILLING and SMA Solar into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AWILCO DRILLING PLC and SMA Solar Technology, you can compare the effects of market volatilities on AWILCO DRILLING and SMA Solar 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 AWILCO DRILLING with a short position of SMA Solar. Check out your portfolio center. Please also check ongoing floating volatility patterns of AWILCO DRILLING and SMA Solar.
Diversification Opportunities for AWILCO DRILLING and SMA Solar
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between AWILCO and SMA is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding AWILCO DRILLING PLC and SMA Solar Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SMA Solar Technology and AWILCO DRILLING 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 AWILCO DRILLING PLC are associated (or correlated) with SMA Solar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SMA Solar Technology has no effect on the direction of AWILCO DRILLING i.e., AWILCO DRILLING and SMA Solar go up and down completely randomly.
Pair Corralation between AWILCO DRILLING and SMA Solar
Assuming the 90 days trading horizon AWILCO DRILLING PLC is expected to generate 0.68 times more return on investment than SMA Solar. However, AWILCO DRILLING PLC is 1.46 times less risky than SMA Solar. It trades about 0.05 of its potential returns per unit of risk. SMA Solar Technology is currently generating about -0.11 per unit of risk. If you would invest 189.00 in AWILCO DRILLING PLC on September 1, 2024 and sell it today you would earn a total of 5.00 from holding AWILCO DRILLING PLC or generate 2.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
AWILCO DRILLING PLC vs. SMA Solar Technology
Performance |
| Timeline |
| AWILCO DRILLING PLC |
| SMA Solar Technology |
AWILCO DRILLING and SMA Solar Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AWILCO DRILLING and SMA Solar
The main advantage of trading using opposite AWILCO DRILLING and SMA Solar positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AWILCO DRILLING position performs unexpectedly, SMA Solar 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 SMA Solar will offset losses from the drop in SMA Solar's long position.| AWILCO DRILLING vs. Apple Inc | AWILCO DRILLING vs. Apple Inc | AWILCO DRILLING vs. Apple Inc | AWILCO DRILLING vs. Apple Inc |
| SMA Solar vs. PSI Software AG | SMA Solar vs. Alfa Financial Software | SMA Solar vs. Major Drilling Group | SMA Solar vs. ATOSS SOFTWARE |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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