Correlation Between AKITA Drilling and Everspin Technologies

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

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

Diversification Opportunities for AKITA Drilling and Everspin Technologies

-0.15

Correlation Coefficient

AKITA Drilling  Everspin Technologies

Good diversification

The 3 months correlation between AKITA and Everspin is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding AKITA Drilling and Everspin Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Everspin Technologies 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 Everspin Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Everspin Technologies has no effect on the direction of AKITA Drilling i.e., AKITA Drilling and Everspin Technologies go up and down completely randomly.

Pair Corralation between AKITA Drilling and Everspin Technologies

Assuming the 90 days horizon AKITA Drilling is expected to generate 7.99 times less return on investment than Everspin Technologies. In addition to that, AKITA Drilling is 1.08 times more volatile than Everspin Technologies. It trades about 0.0 of its total potential returns per unit of risk. Everspin Technologies is currently generating about 0.02 per unit of volatility. If you would invest  592.00  in Everspin Technologies on September 29, 2024 and sell it today you would earn a total of  65.00  from holding Everspin Technologies or generate 10.98% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.8%
Values	Daily Returns

AKITA Drilling  vs.  Everspin Technologies

AKITA Drilling

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AKITA Drilling has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

Everspin Technologies

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Everspin Technologies are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very inconsistent basic indicators, Everspin Technologies displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with AKITA Drilling and Everspin Technologies

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

The idea behind AKITA Drilling and Everspin Technologies 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.