Correlation Between POWERGRID Infrastructure and United Drilling
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By analyzing existing cross correlation between POWERGRID Infrastructure Investment and United Drilling Tools, you can compare the effects of market volatilities on POWERGRID Infrastructure and United 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 POWERGRID Infrastructure with a short position of United Drilling. Check out your portfolio center. Please also check ongoing floating volatility patterns of POWERGRID Infrastructure and United Drilling.
Diversification Opportunities for POWERGRID Infrastructure and United Drilling
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between POWERGRID and United is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding POWERGRID Infrastructure Inves and United Drilling Tools in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Drilling Tools and POWERGRID Infrastructure 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 POWERGRID Infrastructure Investment are associated (or correlated) with United Drilling. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Drilling Tools has no effect on the direction of POWERGRID Infrastructure i.e., POWERGRID Infrastructure and United Drilling go up and down completely randomly.
Pair Corralation between POWERGRID Infrastructure and United Drilling
Assuming the 90 days trading horizon POWERGRID Infrastructure Investment is expected to under-perform the United Drilling. But the stock apears to be less risky and, when comparing its historical volatility, POWERGRID Infrastructure Investment is 3.8 times less risky than United Drilling. The stock trades about -0.28 of its potential returns per unit of risk. The United Drilling Tools is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 25,253 in United Drilling Tools on September 12, 2024 and sell it today you would earn a total of 2,252 from holding United Drilling Tools or generate 8.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
POWERGRID Infrastructure Inves vs. United Drilling Tools
Performance |
| Timeline |
| POWERGRID Infrastructure |
| United Drilling Tools |
POWERGRID Infrastructure and United Drilling Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with POWERGRID Infrastructure and United Drilling
The main advantage of trading using opposite POWERGRID Infrastructure and United Drilling positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if POWERGRID Infrastructure position performs unexpectedly, United 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 United Drilling will offset losses from the drop in United Drilling's long position.The idea behind POWERGRID Infrastructure Investment and United Drilling Tools pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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