Correlation Between AKITA Drilling and Park Electrochemical
Can any of the company-specific risk be diversified away by investing in both AKITA Drilling and Park Electrochemical 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 Park Electrochemical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AKITA Drilling and Park Electrochemical, you can compare the effects of market volatilities on AKITA Drilling and Park Electrochemical 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 Park Electrochemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of AKITA Drilling and Park Electrochemical.
Diversification Opportunities for AKITA Drilling and Park Electrochemical
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between AKITA and Park is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding AKITA Drilling and Park Electrochemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Park Electrochemical 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 Park Electrochemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Park Electrochemical has no effect on the direction of AKITA Drilling i.e., AKITA Drilling and Park Electrochemical go up and down completely randomly.
Pair Corralation between AKITA Drilling and Park Electrochemical
Assuming the 90 days horizon AKITA Drilling is expected to generate 1.05 times more return on investment than Park Electrochemical. However, AKITA Drilling is 1.05 times more volatile than Park Electrochemical. It trades about 0.04 of its potential returns per unit of risk. Park Electrochemical is currently generating about -0.01 per unit of risk. If you would invest 115.00 in AKITA Drilling on September 14, 2024 and sell it today you would earn a total of 1.00 from holding AKITA Drilling or generate 0.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
AKITA Drilling vs. Park Electrochemical
Performance |
| Timeline |
| AKITA Drilling |
| Park Electrochemical |
AKITA Drilling and Park Electrochemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AKITA Drilling and Park Electrochemical
The main advantage of trading using opposite AKITA Drilling and Park Electrochemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AKITA Drilling position performs unexpectedly, Park Electrochemical 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 Park Electrochemical will offset losses from the drop in Park Electrochemical'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 |
| Park Electrochemical vs. Innovative Solutions and | Park Electrochemical vs. VSE Corporation | Park Electrochemical vs. Curtiss Wright | Park Electrochemical vs. Ducommun Incorporated |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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