Correlation Between AKITA Drilling and Luxfer Holdings
Can any of the company-specific risk be diversified away by investing in both AKITA Drilling and Luxfer Holdings 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 Luxfer Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AKITA Drilling and Luxfer Holdings PLC, you can compare the effects of market volatilities on AKITA Drilling and Luxfer Holdings 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 Luxfer Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of AKITA Drilling and Luxfer Holdings.
Diversification Opportunities for AKITA Drilling and Luxfer Holdings
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between AKITA and Luxfer is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding AKITA Drilling and Luxfer Holdings PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Luxfer Holdings PLC 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 Luxfer Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Luxfer Holdings PLC has no effect on the direction of AKITA Drilling i.e., AKITA Drilling and Luxfer Holdings go up and down completely randomly.
Pair Corralation between AKITA Drilling and Luxfer Holdings
Assuming the 90 days horizon AKITA Drilling is expected to generate 0.71 times more return on investment than Luxfer Holdings. However, AKITA Drilling is 1.42 times less risky than Luxfer Holdings. It trades about -0.03 of its potential returns per unit of risk. Luxfer Holdings PLC is currently generating about -0.06 per unit of risk. If you would invest 111.00 in AKITA Drilling on November 30, 2024 and sell it today you would lose (3.00) from holding AKITA Drilling or give up 2.7% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 97.62% |
| Values | Daily Returns |
AKITA Drilling vs. Luxfer Holdings PLC
Performance |
| Timeline |
| AKITA Drilling |
| Luxfer Holdings PLC |
AKITA Drilling and Luxfer Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AKITA Drilling and Luxfer Holdings
The main advantage of trading using opposite AKITA Drilling and Luxfer Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AKITA Drilling position performs unexpectedly, Luxfer Holdings 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 Luxfer Holdings will offset losses from the drop in Luxfer Holdings' long position.| AKITA Drilling vs. Cathedral Energy Services | AKITA Drilling vs. Vantage Drilling International | AKITA Drilling vs. Seadrill Limited | AKITA Drilling vs. Noble plc |
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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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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