Correlation Between AKITA Drilling and Precision Drilling
Can any of the company-specific risk be diversified away by investing in both AKITA Drilling and Precision Drilling 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 Precision Drilling into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AKITA Drilling and Precision Drilling, you can compare the effects of market volatilities on AKITA Drilling and Precision Drilling 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 Precision Drilling. Check out your portfolio center. Please also check ongoing floating volatility patterns of AKITA Drilling and Precision Drilling.
Diversification Opportunities for AKITA Drilling and Precision Drilling
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between AKITA and Precision is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding AKITA Drilling and Precision Drilling in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Precision Drilling 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 Precision Drilling. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Precision Drilling has no effect on the direction of AKITA Drilling i.e., AKITA Drilling and Precision Drilling go up and down completely randomly.
Pair Corralation between AKITA Drilling and Precision Drilling
Assuming the 90 days trading horizon AKITA Drilling is expected to generate 29.74 times less return on investment than Precision Drilling. But when comparing it to its historical volatility, AKITA Drilling is 1.39 times less risky than Precision Drilling. It trades about 0.01 of its potential returns per unit of risk. Precision Drilling is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 7,950 in Precision Drilling on August 30, 2024 and sell it today you would earn a total of 811.00 from holding Precision Drilling or generate 10.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
AKITA Drilling vs. Precision Drilling
Performance |
| Timeline |
| AKITA Drilling |
| Precision Drilling |
AKITA Drilling and Precision Drilling Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AKITA Drilling and Precision Drilling
The main advantage of trading using opposite AKITA Drilling and Precision Drilling positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AKITA Drilling position performs unexpectedly, Precision Drilling 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 Precision Drilling will offset losses from the drop in Precision Drilling's long position.| AKITA Drilling vs. Ensign Energy Services | AKITA Drilling vs. Total Energy Services | AKITA Drilling vs. PHX Energy Services | AKITA Drilling vs. Western Energy Services |
| Precision Drilling vs. Trican Well Service | Precision Drilling vs. Ensign Energy Services | Precision Drilling vs. Calfrac Well Services | Precision Drilling vs. Birchcliff Energy |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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