Correlation Between Precision Drilling and High Liner
Can any of the company-specific risk be diversified away by investing in both Precision Drilling and High Liner 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 Precision Drilling and High Liner into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Precision Drilling and High Liner Foods, you can compare the effects of market volatilities on Precision Drilling and High Liner 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 Precision Drilling with a short position of High Liner. Check out your portfolio center. Please also check ongoing floating volatility patterns of Precision Drilling and High Liner.
Diversification Opportunities for Precision Drilling and High Liner
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Precision and High is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Precision Drilling and High Liner Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on High Liner Foods and Precision 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 Precision Drilling are associated (or correlated) with High Liner. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of High Liner Foods has no effect on the direction of Precision Drilling i.e., Precision Drilling and High Liner go up and down completely randomly.
Pair Corralation between Precision Drilling and High Liner
Assuming the 90 days horizon Precision Drilling is expected to generate 16.61 times less return on investment than High Liner. In addition to that, Precision Drilling is 1.26 times more volatile than High Liner Foods. It trades about 0.02 of its total potential returns per unit of risk. High Liner Foods is currently generating about 0.36 per unit of volatility. If you would invest 1,400 in High Liner Foods on September 14, 2024 and sell it today you would earn a total of 184.00 from holding High Liner Foods or generate 13.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Precision Drilling vs. High Liner Foods
Performance |
| Timeline |
| Precision Drilling |
| High Liner Foods |
Precision Drilling and High Liner Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Precision Drilling and High Liner
The main advantage of trading using opposite Precision Drilling and High Liner positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Precision Drilling position performs unexpectedly, High Liner 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 High Liner will offset losses from the drop in High Liner's long position.| Precision Drilling vs. Trican Well Service | Precision Drilling vs. Ensign Energy Services | Precision Drilling vs. Calfrac Well Services | Precision Drilling vs. Birchcliff Energy |
| High Liner vs. Leons Furniture Limited | High Liner vs. Autocanada | High Liner vs. Maple Leaf Foods | High Liner vs. Premium Brands Holdings |
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 Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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