Correlation Between AKITA Drilling and Lomiko Metals

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

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

Diversification Opportunities for AKITA Drilling and Lomiko Metals

-0.37

Correlation Coefficient

AKITA Drilling  Lomiko Metals

Very good diversification

The 3 months correlation between AKITA and Lomiko is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding AKITA Drilling and Lomiko Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lomiko Metals 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 Lomiko Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lomiko Metals has no effect on the direction of AKITA Drilling i.e., AKITA Drilling and Lomiko Metals go up and down completely randomly.

Pair Corralation between AKITA Drilling and Lomiko Metals

Assuming the 90 days trading horizon AKITA Drilling is expected to generate 4.17 times less return on investment than Lomiko Metals. But when comparing it to its historical volatility, AKITA Drilling is 5.09 times less risky than Lomiko Metals. It trades about 0.04 of its potential returns per unit of risk. Lomiko Metals is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  15.00  in Lomiko Metals on October 9, 2024 and sell it today you would lose (3.00) from holding Lomiko Metals or give up 20.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.39%
Values	Daily Returns

AKITA Drilling  vs.  Lomiko Metals

AKITA Drilling

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in AKITA Drilling are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, AKITA Drilling may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Lomiko Metals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lomiko Metals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in February 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with AKITA Drilling and Lomiko Metals

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

The idea behind AKITA Drilling and Lomiko Metals 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.