Correlation Between Stampede Drilling and Abaxx Technologies
Can any of the company-specific risk be diversified away by investing in both Stampede Drilling and Abaxx Technologies 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 Stampede Drilling and Abaxx Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Stampede Drilling and Abaxx Technologies, you can compare the effects of market volatilities on Stampede Drilling and Abaxx Technologies 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 Stampede Drilling with a short position of Abaxx Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stampede Drilling and Abaxx Technologies.
Diversification Opportunities for Stampede Drilling and Abaxx Technologies
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Stampede and Abaxx is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Stampede Drilling and Abaxx Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Abaxx Technologies and Stampede 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 Stampede Drilling are associated (or correlated) with Abaxx Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Abaxx Technologies has no effect on the direction of Stampede Drilling i.e., Stampede Drilling and Abaxx Technologies go up and down completely randomly.
Pair Corralation between Stampede Drilling and Abaxx Technologies
Assuming the 90 days horizon Stampede Drilling is expected to generate 1.4 times more return on investment than Abaxx Technologies. However, Stampede Drilling is 1.4 times more volatile than Abaxx Technologies. It trades about -0.02 of its potential returns per unit of risk. Abaxx Technologies is currently generating about -0.05 per unit of risk. If you would invest 25.00 in Stampede Drilling on December 5, 2024 and sell it today you would lose (7.00) from holding Stampede Drilling or give up 28.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.6% |
| Values | Daily Returns |
Stampede Drilling vs. Abaxx Technologies
Performance |
| Timeline |
| Stampede Drilling |
| Abaxx Technologies |
Stampede Drilling and Abaxx Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Stampede Drilling and Abaxx Technologies
The main advantage of trading using opposite Stampede Drilling and Abaxx Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stampede Drilling position performs unexpectedly, Abaxx Technologies 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 Abaxx Technologies will offset losses from the drop in Abaxx Technologies' long position.| Stampede Drilling vs. STEP Energy Services | ||
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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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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