Correlation Between Daldrup Söhne and Patterson-UTI Energy

Can any of the company-specific risk be diversified away by investing in both Daldrup Söhne and Patterson-UTI Energy 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 Daldrup Söhne and Patterson-UTI Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Daldrup Shne Aktiengesellschaft and Patterson UTI Energy, you can compare the effects of market volatilities on Daldrup Söhne and Patterson-UTI Energy 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 Daldrup Söhne with a short position of Patterson-UTI Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daldrup Söhne and Patterson-UTI Energy.

Diversification Opportunities for Daldrup Söhne and Patterson-UTI Energy

0.04

Correlation Coefficient

Daldrup Söhne  Patterson-UTI Energy

Significant diversification

The 3 months correlation between Daldrup and Patterson-UTI is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Daldrup Shne Aktiengesellschaf and Patterson UTI Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Patterson UTI Energy and Daldrup Söhne 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 Daldrup Shne Aktiengesellschaft are associated (or correlated) with Patterson-UTI Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Patterson UTI Energy has no effect on the direction of Daldrup Söhne i.e., Daldrup Söhne and Patterson-UTI Energy go up and down completely randomly.

Pair Corralation between Daldrup Söhne and Patterson-UTI Energy

Assuming the 90 days trading horizon Daldrup Shne Aktiengesellschaft is expected to under-perform the Patterson-UTI Energy. But the stock apears to be less risky and, when comparing its historical volatility, Daldrup Shne Aktiengesellschaft is 1.16 times less risky than Patterson-UTI Energy. The stock trades about -0.01 of its potential returns per unit of risk. The Patterson UTI Energy is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  785.00  in Patterson UTI Energy on December 2, 2024 and sell it today you would lose (15.00) from holding Patterson UTI Energy or give up 1.91% of portfolio value over 90 days.

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

Daldrup Shne Aktiengesellschaf  vs.  Patterson UTI Energy

Daldrup Shne Aktieng

Risk-Adjusted Performance

Very Weak

Over the last 90 days Daldrup Shne Aktiengesellschaft has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Daldrup Söhne is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Patterson UTI Energy

Risk-Adjusted Performance

Very Weak

Over the last 90 days Patterson UTI Energy has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Patterson-UTI Energy is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Daldrup Söhne and Patterson-UTI Energy

The main advantage of trading using opposite Daldrup Söhne and Patterson-UTI Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Daldrup Söhne position performs unexpectedly, Patterson-UTI Energy 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 Patterson-UTI Energy will offset losses from the drop in Patterson-UTI Energy's long position.

The idea behind Daldrup Shne Aktiengesellschaft and Patterson UTI Energy 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.