Correlation Between AKITA Drilling and Biglari Holdings

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

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

Diversification Opportunities for AKITA Drilling and Biglari Holdings

0.03

Correlation Coefficient

AKITA Drilling  Biglari Holdings

Significant diversification

The 3 months correlation between AKITA and Biglari is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding AKITA Drilling and Biglari Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Biglari Holdings 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 Biglari Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Biglari Holdings has no effect on the direction of AKITA Drilling i.e., AKITA Drilling and Biglari Holdings go up and down completely randomly.

Pair Corralation between AKITA Drilling and Biglari Holdings

Assuming the 90 days horizon AKITA Drilling is expected to generate 6.89 times less return on investment than Biglari Holdings. In addition to that, AKITA Drilling is 1.38 times more volatile than Biglari Holdings. It trades about 0.01 of its total potential returns per unit of risk. Biglari Holdings is currently generating about 0.07 per unit of volatility. If you would invest  13,835  in Biglari Holdings on September 24, 2024 and sell it today you would earn a total of  11,233  from holding Biglari Holdings or generate 81.19% return on investment over 90 days.

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

AKITA Drilling  vs.  Biglari Holdings

AKITA Drilling

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in AKITA Drilling are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, AKITA Drilling is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Biglari Holdings

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Biglari Holdings are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Despite fairly unsteady technical indicators, Biglari Holdings demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with AKITA Drilling and Biglari Holdings

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

The idea behind AKITA Drilling and Biglari Holdings 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.