Correlation Between Leons Furniture and AKITA Drilling
Can any of the company-specific risk be diversified away by investing in both Leons Furniture and AKITA 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 Leons Furniture and AKITA Drilling into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Leons Furniture Limited and AKITA Drilling, you can compare the effects of market volatilities on Leons Furniture and AKITA 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 Leons Furniture with a short position of AKITA Drilling. Check out your portfolio center. Please also check ongoing floating volatility patterns of Leons Furniture and AKITA Drilling.
Diversification Opportunities for Leons Furniture and AKITA Drilling
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Leons and AKITA is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Leons Furniture Limited and AKITA Drilling in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AKITA Drilling and Leons Furniture 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 Leons Furniture Limited are associated (or correlated) with AKITA Drilling. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AKITA Drilling has no effect on the direction of Leons Furniture i.e., Leons Furniture and AKITA Drilling go up and down completely randomly.
Pair Corralation between Leons Furniture and AKITA Drilling
Assuming the 90 days trading horizon Leons Furniture Limited is expected to under-perform the AKITA Drilling. But the stock apears to be less risky and, when comparing its historical volatility, Leons Furniture Limited is 1.68 times less risky than AKITA Drilling. The stock trades about -0.17 of its potential returns per unit of risk. The AKITA Drilling is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 147.00 in AKITA Drilling on August 28, 2024 and sell it today you would earn a total of 15.00 from holding AKITA Drilling or generate 10.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Leons Furniture Limited vs. AKITA Drilling
Performance |
| Timeline |
| Leons Furniture |
| AKITA Drilling |
Leons Furniture and AKITA Drilling Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Leons Furniture and AKITA Drilling
The main advantage of trading using opposite Leons Furniture and AKITA Drilling positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Leons Furniture position performs unexpectedly, AKITA 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 AKITA Drilling will offset losses from the drop in AKITA Drilling's long position.| Leons Furniture vs. High Liner Foods | Leons Furniture vs. Richelieu Hardware | Leons Furniture vs. North West | Leons Furniture vs. Toromont Industries |
| AKITA Drilling vs. Ensign Energy Services | AKITA Drilling vs. Total Energy Services | AKITA Drilling vs. PHX Energy Services |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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