Correlation Between AWILCO DRILLING and North American

Can any of the company-specific risk be diversified away by investing in both AWILCO DRILLING and North American 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 North American 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 North American Construction, you can compare the effects of market volatilities on AWILCO DRILLING and North American 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 North American. Check out your portfolio center. Please also check ongoing floating volatility patterns of AWILCO DRILLING and North American.

Diversification Opportunities for AWILCO DRILLING and North American

0.19

Correlation Coefficient

AWILCO DRILLING  North American

Average diversification

The 3 months correlation between AWILCO and North is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding AWILCO DRILLING PLC and North American Construction in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on North American Const 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 North American. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of North American Const has no effect on the direction of AWILCO DRILLING i.e., AWILCO DRILLING and North American go up and down completely randomly.

Pair Corralation between AWILCO DRILLING and North American

Assuming the 90 days trading horizon AWILCO DRILLING PLC is expected to generate 1.34 times more return on investment than North American. However, AWILCO DRILLING is 1.34 times more volatile than North American Construction. It trades about 0.18 of its potential returns per unit of risk. North American Construction is currently generating about 0.09 per unit of risk. If you would invest  186.00  in AWILCO DRILLING PLC on October 23, 2024 and sell it today you would earn a total of  21.00  from holding AWILCO DRILLING PLC or generate 11.29% return on investment over 90 days.

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

AWILCO DRILLING PLC  vs.  North American Construction

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 fragile forward indicators, AWILCO DRILLING reported solid returns over the last few months and may actually be approaching a breakup point.

North American Const

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in North American Construction are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, North American reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with AWILCO DRILLING and North American

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

The idea behind AWILCO DRILLING PLC and North American Construction 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.