Correlation Between AKITA Drilling and ALTICE

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

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

Diversification Opportunities for AKITA Drilling and ALTICE

-0.28

Correlation Coefficient

AKITA Drilling  ALTICE

Very good diversification

The 3 months correlation between AKITA and ALTICE is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding AKITA Drilling and ALTICE FRANCE S in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ALTICE FRANCE S 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 ALTICE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ALTICE FRANCE S has no effect on the direction of AKITA Drilling i.e., AKITA Drilling and ALTICE go up and down completely randomly.

Pair Corralation between AKITA Drilling and ALTICE

Assuming the 90 days horizon AKITA Drilling is expected to generate 505.7 times less return on investment than ALTICE. But when comparing it to its historical volatility, AKITA Drilling is 18.37 times less risky than ALTICE. It trades about 0.0 of its potential returns per unit of risk. ALTICE FRANCE S is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  7,856  in ALTICE FRANCE S on October 22, 2024 and sell it today you would lose (556.00) from holding ALTICE FRANCE S or give up 7.08% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	71.57%
Values	Daily Returns

AKITA Drilling  vs.  ALTICE FRANCE S

AKITA Drilling

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in AKITA Drilling are ranked lower than 3 (%) 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.

ALTICE FRANCE S

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ALTICE FRANCE S has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, ALTICE is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with AKITA Drilling and ALTICE

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

The idea behind AKITA Drilling and ALTICE FRANCE S 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.