Correlation Between PRECISION DRILLING and AMAG AUSTRIA
Can any of the company-specific risk be diversified away by investing in both PRECISION DRILLING and AMAG AUSTRIA 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 AMAG AUSTRIA 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 AMAG AUSTRIA M, you can compare the effects of market volatilities on PRECISION DRILLING and AMAG AUSTRIA 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 AMAG AUSTRIA. Check out your portfolio center. Please also check ongoing floating volatility patterns of PRECISION DRILLING and AMAG AUSTRIA.
Diversification Opportunities for PRECISION DRILLING and AMAG AUSTRIA
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between PRECISION and AMAG is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding PRECISION DRILLING P and AMAG AUSTRIA M in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AMAG AUSTRIA M 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 AMAG AUSTRIA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AMAG AUSTRIA M has no effect on the direction of PRECISION DRILLING i.e., PRECISION DRILLING and AMAG AUSTRIA go up and down completely randomly.
Pair Corralation between PRECISION DRILLING and AMAG AUSTRIA
Assuming the 90 days trading horizon PRECISION DRILLING P is expected to generate 2.93 times more return on investment than AMAG AUSTRIA. However, PRECISION DRILLING is 2.93 times more volatile than AMAG AUSTRIA M. It trades about 0.0 of its potential returns per unit of risk. AMAG AUSTRIA M is currently generating about -0.06 per unit of risk. If you would invest 6,150 in PRECISION DRILLING P on September 5, 2024 and sell it today you would lose (150.00) from holding PRECISION DRILLING P or give up 2.44% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.22% |
| Values | Daily Returns |
PRECISION DRILLING P vs. AMAG AUSTRIA M
Performance |
| Timeline |
| PRECISION DRILLING |
| AMAG AUSTRIA M |
PRECISION DRILLING and AMAG AUSTRIA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PRECISION DRILLING and AMAG AUSTRIA
The main advantage of trading using opposite PRECISION DRILLING and AMAG AUSTRIA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PRECISION DRILLING position performs unexpectedly, AMAG AUSTRIA 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 AMAG AUSTRIA will offset losses from the drop in AMAG AUSTRIA's long position.The idea behind PRECISION DRILLING P and AMAG AUSTRIA M 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.| AMAG AUSTRIA vs. PRECISION DRILLING P | AMAG AUSTRIA vs. Siamgas And Petrochemicals | AMAG AUSTRIA vs. Sanyo Chemical Industries | AMAG AUSTRIA vs. NISSAN CHEMICAL IND |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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