Correlation Between AKITA Drilling and Relx PLC
Can any of the company-specific risk be diversified away by investing in both AKITA Drilling and Relx PLC 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 Relx PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AKITA Drilling and Relx PLC ADR, you can compare the effects of market volatilities on AKITA Drilling and Relx PLC 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 Relx PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of AKITA Drilling and Relx PLC.
Diversification Opportunities for AKITA Drilling and Relx PLC
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between AKITA and Relx is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding AKITA Drilling and Relx PLC ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Relx PLC ADR 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 Relx PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Relx PLC ADR has no effect on the direction of AKITA Drilling i.e., AKITA Drilling and Relx PLC go up and down completely randomly.
Pair Corralation between AKITA Drilling and Relx PLC
Assuming the 90 days horizon AKITA Drilling is expected to under-perform the Relx PLC. In addition to that, AKITA Drilling is 1.57 times more volatile than Relx PLC ADR. It trades about -0.14 of its total potential returns per unit of risk. Relx PLC ADR is currently generating about -0.05 per unit of volatility. If you would invest 4,985 in Relx PLC ADR on December 4, 2024 and sell it today you would lose (79.00) from holding Relx PLC ADR or give up 1.58% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
AKITA Drilling vs. Relx PLC ADR
Performance |
| Timeline |
| AKITA Drilling |
| Relx PLC ADR |
AKITA Drilling and Relx PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AKITA Drilling and Relx PLC
The main advantage of trading using opposite AKITA Drilling and Relx PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AKITA Drilling position performs unexpectedly, Relx PLC 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 Relx PLC will offset losses from the drop in Relx PLC'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 |
| Relx PLC vs. Maximus | Relx PLC vs. CBIZ Inc | Relx PLC vs. First Advantage Corp | Relx PLC vs. Network 1 Technologies |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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