Correlation Between AKITA Drilling and APACHE

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Can any of the company-specific risk be diversified away by investing in both AKITA Drilling and APACHE 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 APACHE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AKITA Drilling and APACHE P 525, you can compare the effects of market volatilities on AKITA Drilling and APACHE 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 APACHE. Check out your portfolio center. Please also check ongoing floating volatility patterns of AKITA Drilling and APACHE.

Diversification Opportunities for AKITA Drilling and APACHE

-0.23
  Correlation Coefficient

Very good diversification

The 3 months correlation between AKITA and APACHE is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding AKITA Drilling and APACHE P 525 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on APACHE P 525 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 APACHE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of APACHE P 525 has no effect on the direction of AKITA Drilling i.e., AKITA Drilling and APACHE go up and down completely randomly.

Pair Corralation between AKITA Drilling and APACHE

Assuming the 90 days horizon AKITA Drilling is expected to generate 1.11 times more return on investment than APACHE. However, AKITA Drilling is 1.11 times more volatile than APACHE P 525. It trades about 0.01 of its potential returns per unit of risk. APACHE P 525 is currently generating about -0.19 per unit of risk. If you would invest  115.00  in AKITA Drilling on August 29, 2024 and sell it today you would earn a total of  0.00  from holding AKITA Drilling or generate 0.0% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy86.36%
ValuesDaily Returns

AKITA Drilling  vs.  APACHE P 525

 Performance 
       Timeline  
AKITA Drilling 

Risk-Adjusted Performance

5 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in AKITA Drilling are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, AKITA Drilling may actually be approaching a critical reversion point that can send shares even higher in December 2024.
APACHE P 525 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days APACHE P 525 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest abnormal performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for APACHE P 525 investors.

AKITA Drilling and APACHE Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with AKITA Drilling and APACHE

The main advantage of trading using opposite AKITA Drilling and APACHE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AKITA Drilling position performs unexpectedly, APACHE 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 APACHE will offset losses from the drop in APACHE's long position.
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The idea behind AKITA Drilling and APACHE P 525 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.
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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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.

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