Correlation Between IMPERIAL TOBACCO and AWILCO DRILLING
Can any of the company-specific risk be diversified away by investing in both IMPERIAL TOBACCO and AWILCO 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 IMPERIAL TOBACCO and AWILCO DRILLING into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between IMPERIAL TOBACCO and AWILCO DRILLING PLC, you can compare the effects of market volatilities on IMPERIAL TOBACCO and AWILCO 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 IMPERIAL TOBACCO with a short position of AWILCO DRILLING. Check out your portfolio center. Please also check ongoing floating volatility patterns of IMPERIAL TOBACCO and AWILCO DRILLING.
Diversification Opportunities for IMPERIAL TOBACCO and AWILCO DRILLING
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between IMPERIAL and AWILCO is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding IMPERIAL TOBACCO and AWILCO DRILLING PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AWILCO DRILLING PLC and IMPERIAL TOBACCO 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 IMPERIAL TOBACCO are associated (or correlated) with AWILCO DRILLING. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AWILCO DRILLING PLC has no effect on the direction of IMPERIAL TOBACCO i.e., IMPERIAL TOBACCO and AWILCO DRILLING go up and down completely randomly.
Pair Corralation between IMPERIAL TOBACCO and AWILCO DRILLING
Assuming the 90 days trading horizon IMPERIAL TOBACCO is expected to generate 0.16 times more return on investment than AWILCO DRILLING. However, IMPERIAL TOBACCO is 6.31 times less risky than AWILCO DRILLING. It trades about 0.24 of its potential returns per unit of risk. AWILCO DRILLING PLC is currently generating about 0.02 per unit of risk. If you would invest 2,943 in IMPERIAL TOBACCO on September 22, 2024 and sell it today you would earn a total of 138.00 from holding IMPERIAL TOBACCO or generate 4.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
IMPERIAL TOBACCO vs. AWILCO DRILLING PLC
Performance |
| Timeline |
| IMPERIAL TOBACCO |
| AWILCO DRILLING PLC |
IMPERIAL TOBACCO and AWILCO DRILLING Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IMPERIAL TOBACCO and AWILCO DRILLING
The main advantage of trading using opposite IMPERIAL TOBACCO and AWILCO DRILLING positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IMPERIAL TOBACCO position performs unexpectedly, AWILCO 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 AWILCO DRILLING will offset losses from the drop in AWILCO DRILLING's long position.| IMPERIAL TOBACCO vs. Eastman Chemical | IMPERIAL TOBACCO vs. NISSAN CHEMICAL IND | IMPERIAL TOBACCO vs. Nordic Semiconductor ASA | IMPERIAL TOBACCO vs. Elmos Semiconductor SE |
| AWILCO DRILLING vs. BLUESCOPE STEEL | AWILCO DRILLING vs. Insteel Industries | AWILCO DRILLING vs. IMPERIAL TOBACCO | AWILCO DRILLING vs. MITSUBISHI STEEL MFG |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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