Correlation Between Major Drilling and WIMFARM SA
Can any of the company-specific risk be diversified away by investing in both Major Drilling and WIMFARM SA 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 Major Drilling and WIMFARM SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Major Drilling Group and WIMFARM SA EO, you can compare the effects of market volatilities on Major Drilling and WIMFARM SA 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 Major Drilling with a short position of WIMFARM SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Major Drilling and WIMFARM SA.
Diversification Opportunities for Major Drilling and WIMFARM SA
0.13 | Correlation Coefficient |
Average diversification
The 3 months correlation between Major and WIMFARM is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Major Drilling Group and WIMFARM SA EO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WIMFARM SA EO and Major 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 Major Drilling Group are associated (or correlated) with WIMFARM SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WIMFARM SA EO has no effect on the direction of Major Drilling i.e., Major Drilling and WIMFARM SA go up and down completely randomly.
Pair Corralation between Major Drilling and WIMFARM SA
Assuming the 90 days horizon Major Drilling is expected to generate 12.54 times less return on investment than WIMFARM SA. But when comparing it to its historical volatility, Major Drilling Group is 2.51 times less risky than WIMFARM SA. It trades about 0.02 of its potential returns per unit of risk. WIMFARM SA EO is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 322.00 in WIMFARM SA EO on October 26, 2024 and sell it today you would earn a total of 54.00 from holding WIMFARM SA EO or generate 16.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Major Drilling Group vs. WIMFARM SA EO
Performance |
| Timeline |
| Major Drilling Group |
| WIMFARM SA EO |
Major Drilling and WIMFARM SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Major Drilling and WIMFARM SA
The main advantage of trading using opposite Major Drilling and WIMFARM SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Major Drilling position performs unexpectedly, WIMFARM SA 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 WIMFARM SA will offset losses from the drop in WIMFARM SA's long position.| Major Drilling vs. Gaztransport Technigaz SA | Major Drilling vs. FRACTAL GAMING GROUP | Major Drilling vs. TRAINLINE PLC LS | Major Drilling vs. Gold Road Resources |
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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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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