Correlation Between AKITA Drilling and Leonardo Spa
Can any of the company-specific risk be diversified away by investing in both AKITA Drilling and Leonardo Spa 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 Leonardo Spa into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AKITA Drilling and Leonardo Spa, you can compare the effects of market volatilities on AKITA Drilling and Leonardo Spa 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 Leonardo Spa. Check out your portfolio center. Please also check ongoing floating volatility patterns of AKITA Drilling and Leonardo Spa.
Diversification Opportunities for AKITA Drilling and Leonardo Spa
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between AKITA and Leonardo is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding AKITA Drilling and Leonardo Spa in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Leonardo Spa 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 Leonardo Spa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Leonardo Spa has no effect on the direction of AKITA Drilling i.e., AKITA Drilling and Leonardo Spa go up and down completely randomly.
Pair Corralation between AKITA Drilling and Leonardo Spa
Assuming the 90 days horizon AKITA Drilling is expected to generate 1.02 times less return on investment than Leonardo Spa. But when comparing it to its historical volatility, AKITA Drilling is 1.68 times less risky than Leonardo Spa. It trades about 0.07 of its potential returns per unit of risk. Leonardo Spa is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 2,501 in Leonardo Spa on September 4, 2024 and sell it today you would earn a total of 281.00 from holding Leonardo Spa or generate 11.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.21% |
| Values | Daily Returns |
AKITA Drilling vs. Leonardo Spa
Performance |
| Timeline |
| AKITA Drilling |
| Leonardo Spa |
AKITA Drilling and Leonardo Spa Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AKITA Drilling and Leonardo Spa
The main advantage of trading using opposite AKITA Drilling and Leonardo Spa positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AKITA Drilling position performs unexpectedly, Leonardo Spa 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 Leonardo Spa will offset losses from the drop in Leonardo Spa's long position.| AKITA Drilling vs. Cathedral Energy Services | AKITA Drilling vs. Vantage Drilling International | AKITA Drilling vs. Seadrill Limited | AKITA Drilling vs. Noble plc |
| Leonardo Spa vs. AKITA Drilling | Leonardo Spa vs. Artisan Partners Asset | Leonardo Spa vs. Uranium Energy Corp | Leonardo Spa vs. Transocean |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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