Correlation Between Awilco Drilling and Exact Therapeutics

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

By analyzing existing cross correlation between Awilco Drilling PLC and Exact Therapeutics AS, you can compare the effects of market volatilities on Awilco Drilling and Exact Therapeutics 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 Awilco Drilling with a short position of Exact Therapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Awilco Drilling and Exact Therapeutics.

Diversification Opportunities for Awilco Drilling and Exact Therapeutics

0.0

Correlation Coefficient

Awilco Drilling  Exact Therapeutics

Pay attention - limited upside

The 3 months correlation between Awilco and Exact is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Awilco Drilling PLC and Exact Therapeutics AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Exact Therapeutics and Awilco 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 Awilco Drilling PLC are associated (or correlated) with Exact Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Exact Therapeutics has no effect on the direction of Awilco Drilling i.e., Awilco Drilling and Exact Therapeutics go up and down completely randomly.

Pair Corralation between Awilco Drilling and Exact Therapeutics

Assuming the 90 days trading horizon Awilco Drilling PLC is expected to generate 0.87 times more return on investment than Exact Therapeutics. However, Awilco Drilling PLC is 1.15 times less risky than Exact Therapeutics. It trades about 0.02 of its potential returns per unit of risk. Exact Therapeutics AS is currently generating about -0.08 per unit of risk. If you would invest  2,190  in Awilco Drilling PLC on September 12, 2024 and sell it today you would lose (20.00) from holding Awilco Drilling PLC or give up 0.91% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Awilco Drilling PLC  vs.  Exact Therapeutics AS

Awilco Drilling PLC

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Awilco Drilling PLC are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent essential indicators, Awilco Drilling is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Exact Therapeutics

Risk-Adjusted Performance

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Very Weak

Over the last 90 days Exact Therapeutics AS has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's essential indicators remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Awilco Drilling and Exact Therapeutics

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

The idea behind Awilco Drilling PLC and Exact Therapeutics AS 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.