Correlation Between PRECISION DRILLING and PPG Industries
Can any of the company-specific risk be diversified away by investing in both PRECISION DRILLING and PPG Industries 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 PPG Industries 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 PPG Industries, you can compare the effects of market volatilities on PRECISION DRILLING and PPG Industries 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 PPG Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of PRECISION DRILLING and PPG Industries.
Diversification Opportunities for PRECISION DRILLING and PPG Industries
-0.2 | Correlation Coefficient |
Good diversification
The 3 months correlation between PRECISION and PPG is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding PRECISION DRILLING P and PPG Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PPG Industries 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 PPG Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PPG Industries has no effect on the direction of PRECISION DRILLING i.e., PRECISION DRILLING and PPG Industries go up and down completely randomly.
Pair Corralation between PRECISION DRILLING and PPG Industries
Assuming the 90 days trading horizon PRECISION DRILLING P is expected to under-perform the PPG Industries. In addition to that, PRECISION DRILLING is 1.91 times more volatile than PPG Industries. It trades about -0.05 of its total potential returns per unit of risk. PPG Industries is currently generating about 0.02 per unit of volatility. If you would invest 11,478 in PPG Industries on September 2, 2024 and sell it today you would earn a total of 177.00 from holding PPG Industries or generate 1.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
PRECISION DRILLING P vs. PPG Industries
Performance |
| Timeline |
| PRECISION DRILLING |
| PPG Industries |
PRECISION DRILLING and PPG Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PRECISION DRILLING and PPG Industries
The main advantage of trading using opposite PRECISION DRILLING and PPG Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PRECISION DRILLING position performs unexpectedly, PPG Industries 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 PPG Industries will offset losses from the drop in PPG Industries' long position.| PRECISION DRILLING vs. SHELF DRILLING LTD | PRECISION DRILLING vs. Daldrup Shne Aktiengesellschaft | PRECISION DRILLING vs. Superior Plus Corp | PRECISION DRILLING vs. NMI Holdings |
| PPG Industries vs. INDOFOOD AGRI RES | PPG Industries vs. Lifeway Foods | PPG Industries vs. Austevoll Seafood ASA | PPG Industries vs. Tyson 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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