Correlation Between AdTheorent Holding and AKITA Drilling

Can any of the company-specific risk be diversified away by investing in both AdTheorent Holding 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 AdTheorent Holding and AKITA Drilling into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between AdTheorent Holding and AKITA Drilling, you can compare the effects of market volatilities on AdTheorent Holding 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 AdTheorent Holding with a short position of AKITA Drilling. Check out your portfolio center. Please also check ongoing floating volatility patterns of AdTheorent Holding and AKITA Drilling.

Diversification Opportunities for AdTheorent Holding and AKITA Drilling

0.34

Correlation Coefficient

AdTheorent Holding  AKITA Drilling

Weak diversification

The 3 months correlation between AdTheorent and AKITA is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding AdTheorent Holding and AKITA Drilling in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AKITA Drilling and AdTheorent Holding 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 AdTheorent Holding 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 AdTheorent Holding i.e., AdTheorent Holding and AKITA Drilling go up and down completely randomly.

Pair Corralation between AdTheorent Holding and AKITA Drilling

Given the investment horizon of 90 days AdTheorent Holding is expected to generate 1.46 times more return on investment than AKITA Drilling. However, AdTheorent Holding is 1.46 times more volatile than AKITA Drilling. It trades about 0.07 of its potential returns per unit of risk. AKITA Drilling is currently generating about 0.01 per unit of risk. If you would invest  154.00  in AdTheorent Holding on October 2, 2024 and sell it today you would earn a total of  166.00  from holding AdTheorent Holding or generate 107.79% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	73.19%
Values	Daily Returns

AdTheorent Holding  vs.  AKITA Drilling

AdTheorent Holding

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AdTheorent Holding has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, AdTheorent Holding is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

AKITA Drilling

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with AdTheorent Holding and AKITA Drilling

The main advantage of trading using opposite AdTheorent Holding and AKITA Drilling positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AdTheorent Holding 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 AdTheorent Holding 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.

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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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..