Correlation Between Seadrill and AKITA Drilling
Can any of the company-specific risk be diversified away by investing in both Seadrill and AKITA Drilling 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 Seadrill and AKITA Drilling into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Seadrill Limited and AKITA Drilling, you can compare the effects of market volatilities on Seadrill and AKITA Drilling 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 Seadrill with a short position of AKITA Drilling. Check out your portfolio center. Please also check ongoing floating volatility patterns of Seadrill and AKITA Drilling.
Diversification Opportunities for Seadrill and AKITA Drilling
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between Seadrill and AKITA is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Seadrill Limited and AKITA Drilling in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AKITA Drilling and Seadrill 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 Seadrill Limited are associated (or correlated) with AKITA Drilling. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AKITA Drilling has no effect on the direction of Seadrill i.e., Seadrill and AKITA Drilling go up and down completely randomly.
Pair Corralation between Seadrill and AKITA Drilling
Given the investment horizon of 90 days Seadrill Limited is expected to generate 1.61 times more return on investment than AKITA Drilling. However, Seadrill is 1.61 times more volatile than AKITA Drilling. It trades about 0.13 of its potential returns per unit of risk. AKITA Drilling is currently generating about 0.11 per unit of risk. If you would invest 3,793 in Seadrill Limited on August 28, 2024 and sell it today you would earn a total of 262.00 from holding Seadrill Limited or generate 6.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Seadrill Limited vs. AKITA Drilling
Performance |
| Timeline |
| Seadrill Limited |
| AKITA Drilling |
Seadrill and AKITA Drilling Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Seadrill and AKITA Drilling
The main advantage of trading using opposite Seadrill and AKITA Drilling positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Seadrill position performs unexpectedly, AKITA Drilling 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 AKITA Drilling will offset losses from the drop in AKITA Drilling's long position.| Seadrill vs. Nabors Industries | Seadrill vs. Borr Drilling | Seadrill vs. Patterson UTI Energy | Seadrill vs. Noble plc |
| AKITA Drilling vs. Petroleo Brasileiro Petrobras | AKITA Drilling vs. Equinor ASA ADR | AKITA Drilling vs. Eni SpA ADR | AKITA Drilling vs. YPF Sociedad Anonima |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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