Correlation Between AKITA Drilling and Transportadora

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

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

Diversification Opportunities for AKITA Drilling and Transportadora

0.14

Correlation Coefficient

AKITA Drilling  Transportadora

Average diversification

The 3 months correlation between AKITA and Transportadora is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding AKITA Drilling and Transportadora de Gas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Transportadora de Gas 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 Transportadora. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Transportadora de Gas has no effect on the direction of AKITA Drilling i.e., AKITA Drilling and Transportadora go up and down completely randomly.

Pair Corralation between AKITA Drilling and Transportadora

Assuming the 90 days horizon AKITA Drilling is expected to generate 11.32 times less return on investment than Transportadora. But when comparing it to its historical volatility, AKITA Drilling is 1.16 times less risky than Transportadora. It trades about 0.01 of its potential returns per unit of risk. Transportadora de Gas is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  1,156  in Transportadora de Gas on September 24, 2024 and sell it today you would earn a total of  1,619  from holding Transportadora de Gas or generate 140.05% return on investment over 90 days.

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

AKITA Drilling  vs.  Transportadora de Gas

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.

Transportadora de Gas

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Transportadora de Gas are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady technical and fundamental indicators, Transportadora unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with AKITA Drilling and Transportadora

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

The idea behind AKITA Drilling and Transportadora de Gas 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.