Correlation Between AKITA Drilling and Pool
Can any of the company-specific risk be diversified away by investing in both AKITA Drilling and Pool 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 Pool into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AKITA Drilling and Pool Corporation, you can compare the effects of market volatilities on AKITA Drilling and Pool 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 Pool. Check out your portfolio center. Please also check ongoing floating volatility patterns of AKITA Drilling and Pool.
Diversification Opportunities for AKITA Drilling and Pool
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between AKITA and Pool is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding AKITA Drilling and Pool Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pool 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 Pool. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pool has no effect on the direction of AKITA Drilling i.e., AKITA Drilling and Pool go up and down completely randomly.
Pair Corralation between AKITA Drilling and Pool
Assuming the 90 days horizon AKITA Drilling is expected to generate 27.21 times less return on investment than Pool. But when comparing it to its historical volatility, AKITA Drilling is 1.48 times less risky than Pool. It trades about 0.01 of its potential returns per unit of risk. Pool Corporation is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 35,888 in Pool Corporation on September 3, 2024 and sell it today you would earn a total of 1,821 from holding Pool Corporation or generate 5.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.24% |
| Values | Daily Returns |
AKITA Drilling vs. Pool Corp.
Performance |
| Timeline |
| AKITA Drilling |
| Pool |
AKITA Drilling and Pool Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AKITA Drilling and Pool
The main advantage of trading using opposite AKITA Drilling and Pool positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AKITA Drilling position performs unexpectedly, Pool 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 Pool will offset losses from the drop in Pool's long position.| AKITA Drilling vs. Seadrill Limited | AKITA Drilling vs. Noble plc | AKITA Drilling vs. Borr Drilling | AKITA Drilling vs. SCOR PK |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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