Correlation Between Delek Drilling and 62886HAP6

Can any of the company-specific risk be diversified away by investing in both Delek Drilling and 62886HAP6 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 Delek Drilling and 62886HAP6 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Delek Drilling and NCL 3625, you can compare the effects of market volatilities on Delek Drilling and 62886HAP6 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 Delek Drilling with a short position of 62886HAP6. Check out your portfolio center. Please also check ongoing floating volatility patterns of Delek Drilling and 62886HAP6.

Diversification Opportunities for Delek Drilling and 62886HAP6

0.48

Correlation Coefficient

Delek Drilling  62886HAP6

Very weak diversification

The 3 months correlation between Delek and 62886HAP6 is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Delek Drilling and NCL 3625 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 62886HAP6 and Delek 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 Delek Drilling are associated (or correlated) with 62886HAP6. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 62886HAP6 has no effect on the direction of Delek Drilling i.e., Delek Drilling and 62886HAP6 go up and down completely randomly.

Pair Corralation between Delek Drilling and 62886HAP6

Assuming the 90 days horizon Delek Drilling is expected to generate 4.31 times more return on investment than 62886HAP6. However, Delek Drilling is 4.31 times more volatile than NCL 3625. It trades about 0.12 of its potential returns per unit of risk. NCL 3625 is currently generating about -0.28 per unit of risk. If you would invest  312.00  in Delek Drilling on September 25, 2024 and sell it today you would earn a total of  15.00  from holding Delek Drilling or generate 4.81% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	50.0%
Values	Daily Returns

Delek Drilling   vs.  NCL 3625

Delek Drilling

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Delek Drilling are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, Delek Drilling reported solid returns over the last few months and may actually be approaching a breakup point.

62886HAP6

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NCL 3625 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 62886HAP6 is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Delek Drilling and 62886HAP6

The main advantage of trading using opposite Delek Drilling and 62886HAP6 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Delek Drilling position performs unexpectedly, 62886HAP6 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 62886HAP6 will offset losses from the drop in 62886HAP6's long position.

The idea behind Delek Drilling and NCL 3625 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.