Correlation Between Awilco Drilling and Contango ORE

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

Diversification Opportunities for Awilco Drilling and Contango ORE

0.74

Correlation Coefficient

Awilco Drilling  Contango ORE

Poor diversification

The 3 months correlation between Awilco and Contango is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Awilco Drilling PLC and Contango ORE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Contango ORE 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 Contango ORE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Contango ORE has no effect on the direction of Awilco Drilling i.e., Awilco Drilling and Contango ORE go up and down completely randomly.

Pair Corralation between Awilco Drilling and Contango ORE

Assuming the 90 days horizon Awilco Drilling PLC is expected to generate 0.36 times more return on investment than Contango ORE. However, Awilco Drilling PLC is 2.82 times less risky than Contango ORE. It trades about -0.22 of its potential returns per unit of risk. Contango ORE is currently generating about -0.26 per unit of risk. If you would invest  192.00  in Awilco Drilling PLC on October 12, 2024 and sell it today you would lose (11.00) from holding Awilco Drilling PLC or give up 5.73% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.24%
Values	Daily Returns

Awilco Drilling PLC  vs.  Contango ORE

Awilco Drilling PLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Awilco Drilling PLC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unfluctuating performance, the Stock's fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Contango ORE

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Contango ORE has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's technical and fundamental indicators remain very healthy which may send shares a bit higher in February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Awilco Drilling and Contango ORE

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

The idea behind Awilco Drilling PLC and Contango ORE 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.