Correlation Between AKITA Drilling and LanzaTech Global

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

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

Diversification Opportunities for AKITA Drilling and LanzaTech Global

0.31

Correlation Coefficient

AKITA Drilling  LanzaTech Global

Weak diversification

The 3 months correlation between AKITA and LanzaTech is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding AKITA Drilling and LanzaTech Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LanzaTech Global 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 LanzaTech Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LanzaTech Global has no effect on the direction of AKITA Drilling i.e., AKITA Drilling and LanzaTech Global go up and down completely randomly.

Pair Corralation between AKITA Drilling and LanzaTech Global

Assuming the 90 days horizon AKITA Drilling is expected to under-perform the LanzaTech Global. But the pink sheet apears to be less risky and, when comparing its historical volatility, AKITA Drilling is 9.07 times less risky than LanzaTech Global. The pink sheet trades about -0.09 of its potential returns per unit of risk. The LanzaTech Global is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  10.00  in LanzaTech Global on December 5, 2024 and sell it today you would earn a total of  6.00  from holding LanzaTech Global or generate 60.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.33%
Values	Daily Returns

AKITA Drilling  vs.  LanzaTech Global

AKITA Drilling

Risk-Adjusted Performance

Very Weak

Over the last 90 days AKITA Drilling has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

LanzaTech Global

Risk-Adjusted Performance

OK

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

Pair Trading with AKITA Drilling and LanzaTech Global

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

The idea behind AKITA Drilling and LanzaTech Global 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..