Correlation Between PRECISION DRILLING and Sinotruk
Can any of the company-specific risk be diversified away by investing in both PRECISION DRILLING and Sinotruk 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 Sinotruk into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PRECISION DRILLING P and Sinotruk Limited, you can compare the effects of market volatilities on PRECISION DRILLING and Sinotruk 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 Sinotruk. Check out your portfolio center. Please also check ongoing floating volatility patterns of PRECISION DRILLING and Sinotruk.
Diversification Opportunities for PRECISION DRILLING and Sinotruk
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between PRECISION and Sinotruk is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding PRECISION DRILLING P and Sinotruk Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sinotruk Limited 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 P are associated (or correlated) with Sinotruk. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sinotruk Limited has no effect on the direction of PRECISION DRILLING i.e., PRECISION DRILLING and Sinotruk go up and down completely randomly.
Pair Corralation between PRECISION DRILLING and Sinotruk
Assuming the 90 days trading horizon PRECISION DRILLING P is expected to generate 0.69 times more return on investment than Sinotruk. However, PRECISION DRILLING P is 1.44 times less risky than Sinotruk. It trades about 0.26 of its potential returns per unit of risk. Sinotruk Limited is currently generating about 0.09 per unit of risk. If you would invest 5,700 in PRECISION DRILLING P on October 16, 2024 and sell it today you would earn a total of 600.00 from holding PRECISION DRILLING P or generate 10.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
PRECISION DRILLING P vs. Sinotruk Limited
Performance |
| Timeline |
| PRECISION DRILLING |
| Sinotruk Limited |
PRECISION DRILLING and Sinotruk Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PRECISION DRILLING and Sinotruk
The main advantage of trading using opposite PRECISION DRILLING and Sinotruk positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PRECISION DRILLING position performs unexpectedly, Sinotruk 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 Sinotruk will offset losses from the drop in Sinotruk's long position.| PRECISION DRILLING vs. Plastic Omnium | PRECISION DRILLING vs. Rayonier Advanced Materials | PRECISION DRILLING vs. Nippon Light Metal | PRECISION DRILLING vs. DAIDO METAL TD |
| Sinotruk vs. AWILCO DRILLING PLC | Sinotruk vs. Austevoll Seafood ASA | Sinotruk vs. PRECISION DRILLING P | Sinotruk vs. EBRO FOODS |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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