Correlation Between SENSATA and AKITA Drilling

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both SENSATA 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 SENSATA and AKITA Drilling into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SENSATA TECHNOLOGIES INC and AKITA Drilling, you can compare the effects of market volatilities on SENSATA 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 SENSATA with a short position of AKITA Drilling. Check out your portfolio center. Please also check ongoing floating volatility patterns of SENSATA and AKITA Drilling.

Diversification Opportunities for SENSATA and AKITA Drilling

-0.48
  Correlation Coefficient

Very good diversification

The 3 months correlation between SENSATA and AKITA is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding SENSATA TECHNOLOGIES INC and AKITA Drilling in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AKITA Drilling and SENSATA 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 SENSATA TECHNOLOGIES INC 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 SENSATA i.e., SENSATA and AKITA Drilling go up and down completely randomly.

Pair Corralation between SENSATA and AKITA Drilling

Assuming the 90 days trading horizon SENSATA TECHNOLOGIES INC is expected to under-perform the AKITA Drilling. But the bond apears to be less risky and, when comparing its historical volatility, SENSATA TECHNOLOGIES INC is 5.61 times less risky than AKITA Drilling. The bond trades about -0.01 of its potential returns per unit of risk. The AKITA Drilling is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  109.00  in AKITA Drilling on September 1, 2024 and sell it today you would earn a total of  6.00  from holding AKITA Drilling or generate 5.5% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy94.26%
ValuesDaily Returns

SENSATA TECHNOLOGIES INC  vs.  AKITA Drilling

 Performance 
       Timeline  
SENSATA TECHNOLOGIES INC 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days SENSATA TECHNOLOGIES INC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, SENSATA is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
AKITA Drilling 

Risk-Adjusted Performance

5 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in AKITA Drilling are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, AKITA Drilling may actually be approaching a critical reversion point that can send shares even higher in December 2024.

SENSATA and AKITA Drilling Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with SENSATA and AKITA Drilling

The main advantage of trading using opposite SENSATA and AKITA Drilling positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SENSATA 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.
The idea behind SENSATA TECHNOLOGIES INC and AKITA Drilling 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.
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.

Other Complementary Tools

USA ETFs
Find actively traded Exchange Traded Funds (ETF) in USA
Options Analysis
Analyze and evaluate options and option chains as a potential hedge for your portfolios
Portfolio Optimization
Compute new portfolio that will generate highest expected return given your specified tolerance for risk
Bollinger Bands
Use Bollinger Bands indicator to analyze target price for a given investing horizon
Headlines Timeline
Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity