Correlation Between Major Drilling and JEMTEC
Can any of the company-specific risk be diversified away by investing in both Major Drilling and JEMTEC 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 Major Drilling and JEMTEC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Major Drilling Group and JEMTEC Inc, you can compare the effects of market volatilities on Major Drilling and JEMTEC 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 Major Drilling with a short position of JEMTEC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Major Drilling and JEMTEC.
Diversification Opportunities for Major Drilling and JEMTEC
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Major and JEMTEC is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Major Drilling Group and JEMTEC Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JEMTEC Inc and Major Drilling 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 Major Drilling Group are associated (or correlated) with JEMTEC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JEMTEC Inc has no effect on the direction of Major Drilling i.e., Major Drilling and JEMTEC go up and down completely randomly.
Pair Corralation between Major Drilling and JEMTEC
Assuming the 90 days trading horizon Major Drilling is expected to generate 12.17 times less return on investment than JEMTEC. But when comparing it to its historical volatility, Major Drilling Group is 1.2 times less risky than JEMTEC. It trades about 0.01 of its potential returns per unit of risk. JEMTEC Inc is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 62.00 in JEMTEC Inc on September 14, 2024 and sell it today you would earn a total of 27.00 from holding JEMTEC Inc or generate 43.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Major Drilling Group vs. JEMTEC Inc
Performance |
| Timeline |
| Major Drilling Group |
| JEMTEC Inc |
Major Drilling and JEMTEC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Major Drilling and JEMTEC
The main advantage of trading using opposite Major Drilling and JEMTEC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Major Drilling position performs unexpectedly, JEMTEC 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 JEMTEC will offset losses from the drop in JEMTEC's long position.| Major Drilling vs. Foraco International SA | Major Drilling vs. Geodrill Limited | Major Drilling vs. Bri Chem Corp |
| JEMTEC vs. HPQ Silicon Resources | JEMTEC vs. WELL Health Technologies | JEMTEC vs. Major Drilling Group | JEMTEC vs. Orbit Garant Drilling |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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