Correlation Between Binah Capital and AKITA Drilling

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

By analyzing existing cross correlation between Binah Capital Group, and AKITA Drilling, you can compare the effects of market volatilities on Binah Capital and AKITA Drilling 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 Binah Capital with a short position of AKITA Drilling. Check out your portfolio center. Please also check ongoing floating volatility patterns of Binah Capital and AKITA Drilling.

Diversification Opportunities for Binah Capital and AKITA Drilling

-0.3

Correlation Coefficient

Binah Capital  AKITA Drilling

Very good diversification

The 3 months correlation between Binah and AKITA is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Binah Capital Group, and AKITA Drilling in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AKITA Drilling and Binah Capital 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 Binah Capital Group, are associated (or correlated) with AKITA Drilling. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AKITA Drilling has no effect on the direction of Binah Capital i.e., Binah Capital and AKITA Drilling go up and down completely randomly.

Pair Corralation between Binah Capital and AKITA Drilling

Assuming the 90 days horizon Binah Capital Group, is expected to generate 10.6 times more return on investment than AKITA Drilling. However, Binah Capital is 10.6 times more volatile than AKITA Drilling. It trades about 0.08 of its potential returns per unit of risk. AKITA Drilling is currently generating about 0.07 per unit of risk. If you would invest  10.00  in Binah Capital Group, on September 19, 2024 and sell it today you would lose (4.50) from holding Binah Capital Group, or give up 45.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	64.29%
Values	Daily Returns

Binah Capital Group,  vs.  AKITA Drilling

Binah Capital Group,

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Binah Capital Group, are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile basic indicators, Binah Capital showed solid returns over the last few months and may actually be approaching a breakup point.

AKITA Drilling

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in AKITA Drilling are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, AKITA Drilling may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Binah Capital and AKITA Drilling

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

The idea behind Binah Capital Group, and AKITA Drilling 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..