Correlation Between Pacific Bay and AKITA Drilling
Can any of the company-specific risk be diversified away by investing in both Pacific Bay 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 Pacific Bay and AKITA Drilling into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pacific Bay Minerals and AKITA Drilling, you can compare the effects of market volatilities on Pacific Bay 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 Pacific Bay with a short position of AKITA Drilling. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pacific Bay and AKITA Drilling.
Diversification Opportunities for Pacific Bay and AKITA Drilling
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Pacific and AKITA is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Pacific Bay Minerals and AKITA Drilling in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AKITA Drilling and Pacific Bay 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 Pacific Bay Minerals 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 Pacific Bay i.e., Pacific Bay and AKITA Drilling go up and down completely randomly.
Pair Corralation between Pacific Bay and AKITA Drilling
Assuming the 90 days horizon Pacific Bay Minerals is expected to generate 3.01 times more return on investment than AKITA Drilling. However, Pacific Bay is 3.01 times more volatile than AKITA Drilling. It trades about 0.07 of its potential returns per unit of risk. AKITA Drilling is currently generating about 0.07 per unit of risk. If you would invest 3.50 in Pacific Bay Minerals on September 3, 2024 and sell it today you would earn a total of 1.50 from holding Pacific Bay Minerals or generate 42.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.2% |
| Values | Daily Returns |
Pacific Bay Minerals vs. AKITA Drilling
Performance |
| Timeline |
| Pacific Bay Minerals |
| AKITA Drilling |
Pacific Bay and AKITA Drilling Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pacific Bay and AKITA Drilling
The main advantage of trading using opposite Pacific Bay and AKITA Drilling positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pacific Bay 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.| Pacific Bay vs. Fairfax Financial Holdings | Pacific Bay vs. Canso Credit Trust | Pacific Bay vs. Slate Grocery REIT | Pacific Bay vs. Bragg Gaming Group |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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