Correlation Between AWILCO DRILLING and BLUELINX HLDGS

Can any of the company-specific risk be diversified away by investing in both AWILCO DRILLING and BLUELINX HLDGS 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 AWILCO DRILLING and BLUELINX HLDGS into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between AWILCO DRILLING PLC and BLUELINX HLDGS DL 01, you can compare the effects of market volatilities on AWILCO DRILLING and BLUELINX HLDGS 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 AWILCO DRILLING with a short position of BLUELINX HLDGS. Check out your portfolio center. Please also check ongoing floating volatility patterns of AWILCO DRILLING and BLUELINX HLDGS.

Diversification Opportunities for AWILCO DRILLING and BLUELINX HLDGS

-0.03

Correlation Coefficient

AWILCO DRILLING  BLUELINX HLDGS

Good diversification

The 3 months correlation between AWILCO and BLUELINX is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding AWILCO DRILLING PLC and BLUELINX HLDGS DL 01 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BLUELINX HLDGS DL and AWILCO 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 AWILCO DRILLING PLC are associated (or correlated) with BLUELINX HLDGS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BLUELINX HLDGS DL has no effect on the direction of AWILCO DRILLING i.e., AWILCO DRILLING and BLUELINX HLDGS go up and down completely randomly.

Pair Corralation between AWILCO DRILLING and BLUELINX HLDGS

Assuming the 90 days trading horizon AWILCO DRILLING is expected to generate 1.02 times less return on investment than BLUELINX HLDGS. In addition to that, AWILCO DRILLING is 1.45 times more volatile than BLUELINX HLDGS DL 01. It trades about 0.05 of its total potential returns per unit of risk. BLUELINX HLDGS DL 01 is currently generating about 0.08 per unit of volatility. If you would invest  9,400  in BLUELINX HLDGS DL 01 on October 24, 2024 and sell it today you would earn a total of  1,200  from holding BLUELINX HLDGS DL 01 or generate 12.77% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

AWILCO DRILLING PLC  vs.  BLUELINX HLDGS DL 01

AWILCO DRILLING PLC

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in AWILCO DRILLING PLC are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain forward indicators, AWILCO DRILLING reported solid returns over the last few months and may actually be approaching a breakup point.

BLUELINX HLDGS DL

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in BLUELINX HLDGS DL 01 are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, BLUELINX HLDGS reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with AWILCO DRILLING and BLUELINX HLDGS

The main advantage of trading using opposite AWILCO DRILLING and BLUELINX HLDGS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AWILCO DRILLING position performs unexpectedly, BLUELINX HLDGS 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 BLUELINX HLDGS will offset losses from the drop in BLUELINX HLDGS's long position.

The idea behind AWILCO DRILLING PLC and BLUELINX HLDGS DL 01 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.

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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 Global Correlations module to find global opportunities by holding instruments from different markets.