Correlation Between AKITA Drilling and Canaf Investments
Can any of the company-specific risk be diversified away by investing in both AKITA Drilling and Canaf Investments 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 AKITA Drilling and Canaf Investments into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AKITA Drilling and Canaf Investments, you can compare the effects of market volatilities on AKITA Drilling and Canaf Investments 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 AKITA Drilling with a short position of Canaf Investments. Check out your portfolio center. Please also check ongoing floating volatility patterns of AKITA Drilling and Canaf Investments.
Diversification Opportunities for AKITA Drilling and Canaf Investments
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between AKITA and Canaf is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding AKITA Drilling and Canaf Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Canaf Investments and AKITA 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 AKITA Drilling are associated (or correlated) with Canaf Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Canaf Investments has no effect on the direction of AKITA Drilling i.e., AKITA Drilling and Canaf Investments go up and down completely randomly.
Pair Corralation between AKITA Drilling and Canaf Investments
Assuming the 90 days trading horizon AKITA Drilling is expected to generate 0.43 times more return on investment than Canaf Investments. However, AKITA Drilling is 2.32 times less risky than Canaf Investments. It trades about 0.08 of its potential returns per unit of risk. Canaf Investments is currently generating about -0.14 per unit of risk. If you would invest 161.00 in AKITA Drilling on September 13, 2024 and sell it today you would earn a total of 4.00 from holding AKITA Drilling or generate 2.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
AKITA Drilling vs. Canaf Investments
Performance |
| Timeline |
| AKITA Drilling |
| Canaf Investments |
AKITA Drilling and Canaf Investments Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AKITA Drilling and Canaf Investments
The main advantage of trading using opposite AKITA Drilling and Canaf Investments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AKITA Drilling position performs unexpectedly, Canaf Investments 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 Canaf Investments will offset losses from the drop in Canaf Investments' long position.| AKITA Drilling vs. Trican Well Service | AKITA Drilling vs. Ensign Energy Services | AKITA Drilling vs. Calfrac Well Services | AKITA Drilling vs. Birchcliff Energy |
| Canaf Investments vs. First Majestic Silver | Canaf Investments vs. Ivanhoe Energy | Canaf Investments vs. Orezone Gold Corp | Canaf Investments vs. Faraday Copper Corp |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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