Correlation Between AKITA Drilling and Powered Brands

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Can any of the company-specific risk be diversified away by investing in both AKITA Drilling and Powered Brands 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 Powered Brands into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AKITA Drilling and Powered Brands, you can compare the effects of market volatilities on AKITA Drilling and Powered Brands 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 Powered Brands. Check out your portfolio center. Please also check ongoing floating volatility patterns of AKITA Drilling and Powered Brands.

Diversification Opportunities for AKITA Drilling and Powered Brands

-0.12
  Correlation Coefficient

Good diversification

The 3 months correlation between AKITA and Powered is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding AKITA Drilling and Powered Brands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Powered Brands 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 Powered Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Powered Brands has no effect on the direction of AKITA Drilling i.e., AKITA Drilling and Powered Brands go up and down completely randomly.

Pair Corralation between AKITA Drilling and Powered Brands

If you would invest  102.00  in AKITA Drilling on September 14, 2024 and sell it today you would earn a total of  13.00  from holding AKITA Drilling or generate 12.75% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy0.0%
ValuesDaily Returns

AKITA Drilling  vs.  Powered Brands

 Performance 
       Timeline  
AKITA Drilling 

Risk-Adjusted Performance

9 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in AKITA Drilling are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, AKITA Drilling reported solid returns over the last few months and may actually be approaching a breakup point.
Powered Brands 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Powered Brands has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Powered Brands is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

AKITA Drilling and Powered Brands Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with AKITA Drilling and Powered Brands

The main advantage of trading using opposite AKITA Drilling and Powered Brands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AKITA Drilling position performs unexpectedly, Powered Brands 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 Powered Brands will offset losses from the drop in Powered Brands' long position.
The idea behind AKITA Drilling and Powered Brands pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.

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