Correlation Between Luxfer Holdings and AKITA Drilling
Can any of the company-specific risk be diversified away by investing in both Luxfer Holdings 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 Luxfer Holdings and AKITA Drilling into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Luxfer Holdings PLC and AKITA Drilling, you can compare the effects of market volatilities on Luxfer Holdings 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 Luxfer Holdings with a short position of AKITA Drilling. Check out your portfolio center. Please also check ongoing floating volatility patterns of Luxfer Holdings and AKITA Drilling.
Diversification Opportunities for Luxfer Holdings and AKITA Drilling
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Luxfer and AKITA is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Luxfer Holdings PLC and AKITA Drilling in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AKITA Drilling and Luxfer Holdings 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 Luxfer Holdings PLC 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 Luxfer Holdings i.e., Luxfer Holdings and AKITA Drilling go up and down completely randomly.
Pair Corralation between Luxfer Holdings and AKITA Drilling
Given the investment horizon of 90 days Luxfer Holdings PLC is expected to generate 1.61 times more return on investment than AKITA Drilling. However, Luxfer Holdings is 1.61 times more volatile than AKITA Drilling. It trades about 0.13 of its potential returns per unit of risk. AKITA Drilling is currently generating about -0.04 per unit of risk. If you would invest 1,254 in Luxfer Holdings PLC on September 3, 2024 and sell it today you would earn a total of 182.00 from holding Luxfer Holdings PLC or generate 14.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 97.67% |
| Values | Daily Returns |
Luxfer Holdings PLC vs. AKITA Drilling
Performance |
| Timeline |
| Luxfer Holdings PLC |
| AKITA Drilling |
Luxfer Holdings and AKITA Drilling Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Luxfer Holdings and AKITA Drilling
The main advantage of trading using opposite Luxfer Holdings and AKITA Drilling positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Luxfer Holdings 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.| Luxfer Holdings vs. Graham | Luxfer Holdings vs. Enerpac Tool Group | Luxfer Holdings vs. Kadant Inc | Luxfer Holdings vs. Omega Flex |
| AKITA Drilling vs. Seadrill Limited | AKITA Drilling vs. Noble plc | AKITA Drilling vs. Borr Drilling | AKITA Drilling vs. SCOR PK |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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