Correlation Between AKITA Drilling and Falcon Energy
Can any of the company-specific risk be diversified away by investing in both AKITA Drilling and Falcon 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 AKITA Drilling and Falcon Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AKITA Drilling and Falcon Energy Materials, you can compare the effects of market volatilities on AKITA Drilling and Falcon 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 AKITA Drilling with a short position of Falcon Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of AKITA Drilling and Falcon Energy.
Diversification Opportunities for AKITA Drilling and Falcon Energy
-0.03 | Correlation Coefficient |
Good diversification
The 3 months correlation between AKITA and Falcon is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding AKITA Drilling and Falcon Energy Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Falcon Energy Materials 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 Falcon Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Falcon Energy Materials has no effect on the direction of AKITA Drilling i.e., AKITA Drilling and Falcon Energy go up and down completely randomly.
Pair Corralation between AKITA Drilling and Falcon Energy
Assuming the 90 days trading horizon AKITA Drilling is expected to generate 0.41 times more return on investment than Falcon Energy. However, AKITA Drilling is 2.45 times less risky than Falcon Energy. It trades about -0.06 of its potential returns per unit of risk. Falcon Energy Materials is currently generating about -0.08 per unit of risk. If you would invest 163.00 in AKITA Drilling on December 5, 2024 and sell it today you would lose (13.00) from holding AKITA Drilling or give up 7.98% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
AKITA Drilling vs. Falcon Energy Materials
Performance |
Timeline |
AKITA Drilling |
Falcon Energy Materials |
AKITA Drilling and Falcon Energy Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with AKITA Drilling and Falcon Energy
The main advantage of trading using opposite AKITA Drilling and Falcon Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AKITA Drilling position performs unexpectedly, Falcon 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 Falcon Energy will offset losses from the drop in Falcon Energy's long position.AKITA Drilling vs. Ensign Energy Services | AKITA Drilling vs. Total Energy Services | AKITA Drilling vs. PHX Energy Services | AKITA Drilling vs. Western Energy Services |
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Check out your portfolio center.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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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