Correlation Between High Liner and Precision Drilling
Can any of the company-specific risk be diversified away by investing in both High Liner and Precision 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 High Liner and Precision Drilling into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between High Liner Foods and Precision Drilling, you can compare the effects of market volatilities on High Liner and Precision 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 High Liner with a short position of Precision Drilling. Check out your portfolio center. Please also check ongoing floating volatility patterns of High Liner and Precision Drilling.
Diversification Opportunities for High Liner and Precision Drilling
-0.7 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between High and Precision is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding High Liner Foods and Precision Drilling in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Precision Drilling and High Liner 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 High Liner Foods are associated (or correlated) with Precision Drilling. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Precision Drilling has no effect on the direction of High Liner i.e., High Liner and Precision Drilling go up and down completely randomly.
Pair Corralation between High Liner and Precision Drilling
Assuming the 90 days trading horizon High Liner Foods is expected to generate 1.0 times more return on investment than Precision Drilling. However, High Liner Foods is 1.0 times less risky than Precision Drilling. It trades about 0.11 of its potential returns per unit of risk. Precision Drilling is currently generating about -0.47 per unit of risk. If you would invest 1,562 in High Liner Foods on December 4, 2024 and sell it today you would earn a total of 63.00 from holding High Liner Foods or generate 4.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
High Liner Foods vs. Precision Drilling
Performance |
| Timeline |
| High Liner Foods |
| Precision Drilling |
High Liner and Precision Drilling Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with High Liner and Precision Drilling
The main advantage of trading using opposite High Liner and Precision Drilling positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if High Liner position performs unexpectedly, Precision 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 Precision Drilling will offset losses from the drop in Precision Drilling's long position.| High Liner vs. Leons Furniture Limited | High Liner vs. Autocanada | High Liner vs. Maple Leaf Foods | High Liner vs. Premium Brands Holdings |
| Precision Drilling vs. Trican Well Service | Precision Drilling vs. Ensign Energy Services | Precision Drilling vs. Calfrac Well Services | Precision Drilling vs. Birchcliff Energy |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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