Correlation Between Archer and Deep Value

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

By analyzing existing cross correlation between Archer Limited and Deep Value Driller, you can compare the effects of market volatilities on Archer and Deep Value 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 Archer with a short position of Deep Value. Check out your portfolio center. Please also check ongoing floating volatility patterns of Archer and Deep Value.

Diversification Opportunities for Archer and Deep Value

-0.05

Correlation Coefficient

Archer  Deep Value

Good diversification

The 3 months correlation between Archer and Deep is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Archer Limited and Deep Value Driller in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Deep Value Driller and Archer 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 Archer Limited are associated (or correlated) with Deep Value. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Deep Value Driller has no effect on the direction of Archer i.e., Archer and Deep Value go up and down completely randomly.

Pair Corralation between Archer and Deep Value

Assuming the 90 days trading horizon Archer Limited is expected to generate 1.26 times more return on investment than Deep Value. However, Archer is 1.26 times more volatile than Deep Value Driller. It trades about 0.15 of its potential returns per unit of risk. Deep Value Driller is currently generating about -0.1 per unit of risk. If you would invest  2,252  in Archer Limited on October 26, 2024 and sell it today you would earn a total of  463.00  from holding Archer Limited or generate 20.56% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.33%
Values	Daily Returns

Archer Limited  vs.  Deep Value Driller

Archer Limited

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Archer Limited are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting essential indicators, Archer disclosed solid returns over the last few months and may actually be approaching a breakup point.

Deep Value Driller

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Deep Value Driller has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unfluctuating performance, the Stock's fundamental indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with Archer and Deep Value

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

The idea behind Archer Limited and Deep Value Driller 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.