Correlation Between Awilco Drilling and Techstep ASA

Can any of the company-specific risk be diversified away by investing in both Awilco Drilling and Techstep ASA 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 Techstep ASA 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 Techstep ASA, you can compare the effects of market volatilities on Awilco Drilling and Techstep ASA 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 Techstep ASA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Awilco Drilling and Techstep ASA.

Diversification Opportunities for Awilco Drilling and Techstep ASA

0.32

Correlation Coefficient

Awilco Drilling  Techstep ASA

Weak diversification

The 3 months correlation between Awilco and Techstep is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Awilco Drilling PLC and Techstep ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Techstep ASA 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 Techstep ASA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Techstep ASA has no effect on the direction of Awilco Drilling i.e., Awilco Drilling and Techstep ASA go up and down completely randomly.

Pair Corralation between Awilco Drilling and Techstep ASA

Assuming the 90 days trading horizon Awilco Drilling PLC is expected to generate 1.33 times more return on investment than Techstep ASA. However, Awilco Drilling is 1.33 times more volatile than Techstep ASA. It trades about 0.03 of its potential returns per unit of risk. Techstep ASA is currently generating about -0.05 per unit of risk. If you would invest  2,180  in Awilco Drilling PLC on December 22, 2024 and sell it today you would earn a total of  60.00  from holding Awilco Drilling PLC or generate 2.75% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Awilco Drilling PLC  vs.  Techstep ASA

Awilco Drilling PLC

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Awilco Drilling PLC are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting essential indicators, Awilco Drilling may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Techstep ASA

Risk-Adjusted Performance

Very Weak

Over the last 90 days Techstep ASA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's essential 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 Awilco Drilling and Techstep ASA

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

The idea behind Awilco Drilling PLC and Techstep ASA 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.

Check out your portfolio center.

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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.