Correlation Between AWILCO DRILLING and RCI Hospitality

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

Diversification Opportunities for AWILCO DRILLING and RCI Hospitality

0.21

Correlation Coefficient

AWILCO DRILLING  RCI Hospitality

Modest diversification

The 3 months correlation between AWILCO and RCI is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding AWILCO DRILLING PLC and RCI Hospitality Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RCI Hospitality Holdings 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 RCI Hospitality. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RCI Hospitality Holdings has no effect on the direction of AWILCO DRILLING i.e., AWILCO DRILLING and RCI Hospitality go up and down completely randomly.

Pair Corralation between AWILCO DRILLING and RCI Hospitality

Assuming the 90 days trading horizon AWILCO DRILLING PLC is expected to generate 6.03 times more return on investment than RCI Hospitality. However, AWILCO DRILLING is 6.03 times more volatile than RCI Hospitality Holdings. It trades about 0.04 of its potential returns per unit of risk. RCI Hospitality Holdings is currently generating about -0.03 per unit of risk. If you would invest  246.00  in AWILCO DRILLING PLC on October 23, 2024 and sell it today you would lose (39.00) from holding AWILCO DRILLING PLC or give up 15.85% of portfolio value over 90 days.

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

AWILCO DRILLING PLC  vs.  RCI Hospitality Holdings

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.

RCI Hospitality Holdings

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in RCI Hospitality Holdings are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, RCI Hospitality unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with AWILCO DRILLING and RCI Hospitality

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

The idea behind AWILCO DRILLING PLC and RCI Hospitality Holdings 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.