Correlation Between Capital Drilling and Sabien Technology

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

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

Diversification Opportunities for Capital Drilling and Sabien Technology

0.62

Correlation Coefficient

Capital Drilling  Sabien Technology

Poor diversification

The 3 months correlation between Capital and Sabien is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Capital Drilling and Sabien Technology Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sabien Technology and Capital 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 Capital Drilling are associated (or correlated) with Sabien Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sabien Technology has no effect on the direction of Capital Drilling i.e., Capital Drilling and Sabien Technology go up and down completely randomly.

Pair Corralation between Capital Drilling and Sabien Technology

Assuming the 90 days trading horizon Capital Drilling is expected to generate 0.62 times more return on investment than Sabien Technology. However, Capital Drilling is 1.6 times less risky than Sabien Technology. It trades about -0.04 of its potential returns per unit of risk. Sabien Technology Group is currently generating about -0.1 per unit of risk. If you would invest  8,140  in Capital Drilling on November 30, 2024 and sell it today you would lose (640.00) from holding Capital Drilling or give up 7.86% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.39%
Values	Daily Returns

Capital Drilling  vs.  Sabien Technology Group

Capital Drilling

Risk-Adjusted Performance

Very Weak

Over the last 90 days Capital Drilling has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Sabien Technology

Risk-Adjusted Performance

Very Weak

Over the last 90 days Sabien Technology Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in March 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Capital Drilling and Sabien Technology

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

The idea behind Capital Drilling and Sabien Technology Group 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.