Correlation Between Frontier Transport and Master Drilling
Can any of the company-specific risk be diversified away by investing in both Frontier Transport and Master Drilling 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 Frontier Transport and Master Drilling into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Frontier Transport Holdings and Master Drilling Group, you can compare the effects of market volatilities on Frontier Transport and Master Drilling 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 Frontier Transport with a short position of Master Drilling. Check out your portfolio center. Please also check ongoing floating volatility patterns of Frontier Transport and Master Drilling.
Diversification Opportunities for Frontier Transport and Master Drilling
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Frontier and Master is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Frontier Transport Holdings and Master Drilling Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Master Drilling Group and Frontier Transport 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 Frontier Transport Holdings are associated (or correlated) with Master Drilling. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Master Drilling Group has no effect on the direction of Frontier Transport i.e., Frontier Transport and Master Drilling go up and down completely randomly.
Pair Corralation between Frontier Transport and Master Drilling
Assuming the 90 days trading horizon Frontier Transport Holdings is expected to under-perform the Master Drilling. In addition to that, Frontier Transport is 2.84 times more volatile than Master Drilling Group. It trades about -0.08 of its total potential returns per unit of risk. Master Drilling Group is currently generating about 0.04 per unit of volatility. If you would invest 135,000 in Master Drilling Group on August 24, 2024 and sell it today you would earn a total of 1,800 from holding Master Drilling Group or generate 1.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Frontier Transport Holdings vs. Master Drilling Group
Performance |
| Timeline |
| Frontier Transport |
| Master Drilling Group |
Frontier Transport and Master Drilling Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Frontier Transport and Master Drilling
The main advantage of trading using opposite Frontier Transport and Master Drilling positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Frontier Transport position performs unexpectedly, Master Drilling 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 Master Drilling will offset losses from the drop in Master Drilling's long position.| Frontier Transport vs. Centaur Bci Balanced | Frontier Transport vs. Growthpoint Properties | Frontier Transport vs. Bowler Metcalf | Frontier Transport vs. Shoprite Holdings |
| Master Drilling vs. Prosus NV | Master Drilling vs. Compagnie Financire Richemont | Master Drilling vs. British American Tobacco | Master Drilling vs. Glencore 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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