Correlation Between AKITA Drilling and Seadrill
Can any of the company-specific risk be diversified away by investing in both AKITA Drilling and Seadrill 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 Seadrill into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AKITA Drilling and Seadrill Limited, you can compare the effects of market volatilities on AKITA Drilling and Seadrill 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 Seadrill. Check out your portfolio center. Please also check ongoing floating volatility patterns of AKITA Drilling and Seadrill.
Diversification Opportunities for AKITA Drilling and Seadrill
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between AKITA and Seadrill is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding AKITA Drilling and Seadrill Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Seadrill Limited 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 Seadrill. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Seadrill Limited has no effect on the direction of AKITA Drilling i.e., AKITA Drilling and Seadrill go up and down completely randomly.
Pair Corralation between AKITA Drilling and Seadrill
Assuming the 90 days horizon AKITA Drilling is expected to generate 2.0 times less return on investment than Seadrill. But when comparing it to its historical volatility, AKITA Drilling is 1.61 times less risky than Seadrill. It trades about 0.11 of its potential returns per unit of risk. Seadrill Limited is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 3,793 in Seadrill Limited on August 28, 2024 and sell it today you would earn a total of 262.00 from holding Seadrill Limited or generate 6.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
AKITA Drilling vs. Seadrill Limited
Performance |
| Timeline |
| AKITA Drilling |
| Seadrill Limited |
AKITA Drilling and Seadrill Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AKITA Drilling and Seadrill
The main advantage of trading using opposite AKITA Drilling and Seadrill positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AKITA Drilling position performs unexpectedly, Seadrill 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 Seadrill will offset losses from the drop in Seadrill's long position.| AKITA Drilling vs. Petroleo Brasileiro Petrobras | AKITA Drilling vs. Equinor ASA ADR | AKITA Drilling vs. Eni SpA ADR | AKITA Drilling vs. YPF Sociedad Anonima |
| Seadrill vs. Nabors Industries | Seadrill vs. Borr Drilling | Seadrill vs. Patterson UTI Energy | Seadrill vs. Noble plc |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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