Correlation Between DelphX Capital and AKITA Drilling

Can any of the company-specific risk be diversified away by investing in both DelphX 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 DelphX 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 DelphX Capital Markets and AKITA Drilling, you can compare the effects of market volatilities on DelphX 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 DelphX Capital with a short position of AKITA Drilling. Check out your portfolio center. Please also check ongoing floating volatility patterns of DelphX Capital and AKITA Drilling.

Diversification Opportunities for DelphX Capital and AKITA Drilling

-0.55

Correlation Coefficient

DelphX Capital  AKITA Drilling

Excellent diversification

The 3 months correlation between DelphX and AKITA is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding DelphX Capital Markets and AKITA Drilling in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AKITA Drilling and DelphX 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 DelphX Capital Markets 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 DelphX Capital i.e., DelphX Capital and AKITA Drilling go up and down completely randomly.

Pair Corralation between DelphX Capital and AKITA Drilling

Assuming the 90 days trading horizon DelphX Capital Markets is expected to generate 3.65 times more return on investment than AKITA Drilling. However, DelphX Capital is 3.65 times more volatile than AKITA Drilling. It trades about 0.03 of its potential returns per unit of risk. AKITA Drilling is currently generating about 0.05 per unit of risk. If you would invest  17.00  in DelphX Capital Markets on September 13, 2024 and sell it today you would lose (4.00) from holding DelphX Capital Markets or give up 23.53% of portfolio value over 90 days.

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

DelphX Capital Markets  vs.  AKITA Drilling

DelphX Capital Markets

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days DelphX Capital Markets has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable essential indicators, DelphX Capital is not utilizing all of its potentials. The recent stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

AKITA Drilling

Risk-Adjusted Performance

10 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in AKITA Drilling are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating basic indicators, AKITA Drilling unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with DelphX Capital and AKITA Drilling

The main advantage of trading using opposite DelphX Capital and AKITA Drilling positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DelphX 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 DelphX Capital Markets 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .