Correlation Between Southern Energy and AKITA Drilling
Can any of the company-specific risk be diversified away by investing in both Southern Energy 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 Southern Energy and AKITA Drilling into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Southern Energy Corp and AKITA Drilling, you can compare the effects of market volatilities on Southern Energy 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 Southern Energy with a short position of AKITA Drilling. Check out your portfolio center. Please also check ongoing floating volatility patterns of Southern Energy and AKITA Drilling.
Diversification Opportunities for Southern Energy and AKITA Drilling
-0.68 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Southern and AKITA is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Southern Energy Corp and AKITA Drilling in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AKITA Drilling and Southern Energy 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 Southern Energy Corp 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 Southern Energy i.e., Southern Energy and AKITA Drilling go up and down completely randomly.
Pair Corralation between Southern Energy and AKITA Drilling
Assuming the 90 days horizon Southern Energy Corp is expected to under-perform the AKITA Drilling. In addition to that, Southern Energy is 4.48 times more volatile than AKITA Drilling. It trades about -0.09 of its total potential returns per unit of risk. AKITA Drilling is currently generating about 0.04 per unit of volatility. If you would invest 161.00 in AKITA Drilling on September 5, 2024 and sell it today you would earn a total of 2.00 from holding AKITA Drilling or generate 1.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Southern Energy Corp vs. AKITA Drilling
Performance |
| Timeline |
| Southern Energy Corp |
| AKITA Drilling |
Southern Energy and AKITA Drilling Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Southern Energy and AKITA Drilling
The main advantage of trading using opposite Southern Energy and AKITA Drilling positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Southern Energy 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.| Southern Energy vs. Gear Energy | Southern Energy vs. Journey Energy | Southern Energy vs. Yangarra Resources | Southern Energy vs. Pine Cliff Energy |
| AKITA Drilling vs. Ensign Energy Services | AKITA Drilling vs. Total Energy Services | AKITA Drilling vs. PHX Energy Services | AKITA Drilling vs. Western Energy Services |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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