Correlation Between AKITA Drilling and Brookfield Business

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

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

Diversification Opportunities for AKITA Drilling and Brookfield Business

-0.14

Correlation Coefficient

AKITA Drilling  Brookfield Business

Good diversification

The 3 months correlation between AKITA and Brookfield is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding AKITA Drilling and Brookfield Business Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brookfield Business Corp and AKITA 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 AKITA Drilling are associated (or correlated) with Brookfield Business. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brookfield Business Corp has no effect on the direction of AKITA Drilling i.e., AKITA Drilling and Brookfield Business go up and down completely randomly.

Pair Corralation between AKITA Drilling and Brookfield Business

Assuming the 90 days trading horizon AKITA Drilling is expected to generate 1.54 times more return on investment than Brookfield Business. However, AKITA Drilling is 1.54 times more volatile than Brookfield Business Corp. It trades about 0.13 of its potential returns per unit of risk. Brookfield Business Corp is currently generating about 0.1 per unit of risk. If you would invest  159.00  in AKITA Drilling on December 24, 2024 and sell it today you would earn a total of  33.00  from holding AKITA Drilling or generate 20.75% return on investment over 90 days.

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

AKITA Drilling  vs.  Brookfield Business Corp

AKITA Drilling

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in AKITA Drilling are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, AKITA Drilling unveiled solid returns over the last few months and may actually be approaching a breakup point.

Brookfield Business Corp

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Brookfield Business Corp are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very abnormal basic indicators, Brookfield Business may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with AKITA Drilling and Brookfield Business

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

The idea behind AKITA Drilling and Brookfield Business Corp 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.