Correlation Between PRECISION DRILLING and NEXON
Can any of the company-specific risk be diversified away by investing in both PRECISION DRILLING and NEXON 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 NEXON 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 NEXON Co, you can compare the effects of market volatilities on PRECISION DRILLING and NEXON 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 NEXON. Check out your portfolio center. Please also check ongoing floating volatility patterns of PRECISION DRILLING and NEXON.
Diversification Opportunities for PRECISION DRILLING and NEXON
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between PRECISION and NEXON is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding PRECISION DRILLING P and NEXON Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NEXON 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 NEXON. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NEXON has no effect on the direction of PRECISION DRILLING i.e., PRECISION DRILLING and NEXON go up and down completely randomly.
Pair Corralation between PRECISION DRILLING and NEXON
Assuming the 90 days trading horizon PRECISION DRILLING P is expected to under-perform the NEXON. But the stock apears to be less risky and, when comparing its historical volatility, PRECISION DRILLING P is 2.05 times less risky than NEXON. The stock trades about -0.01 of its potential returns per unit of risk. The NEXON Co is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 434.00 in NEXON Co on September 12, 2024 and sell it today you would earn a total of 876.00 from holding NEXON Co or generate 201.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
PRECISION DRILLING P vs. NEXON Co
Performance |
| Timeline |
| PRECISION DRILLING |
| NEXON |
PRECISION DRILLING and NEXON Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PRECISION DRILLING and NEXON
The main advantage of trading using opposite PRECISION DRILLING and NEXON positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PRECISION DRILLING position performs unexpectedly, NEXON 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 NEXON will offset losses from the drop in NEXON's long position.| PRECISION DRILLING vs. Nabors Industries | PRECISION DRILLING vs. SHELF DRILLING LTD | PRECISION DRILLING vs. Daldrup Shne Aktiengesellschaft |
| NEXON vs. PACIFIC ONLINE | NEXON vs. Pembina Pipeline Corp | NEXON vs. PRECISION DRILLING P | NEXON vs. CarsalesCom |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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