Correlation Between Dawson Geophysical and PTL

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

By analyzing existing cross correlation between Dawson Geophysical and PTL LTD Ordinary, you can compare the effects of market volatilities on Dawson Geophysical and PTL 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 Dawson Geophysical with a short position of PTL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dawson Geophysical and PTL.

Diversification Opportunities for Dawson Geophysical and PTL

-0.4

Correlation Coefficient

Dawson Geophysical  PTL

Very good diversification

The 3 months correlation between Dawson and PTL is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Dawson Geophysical and PTL LTD Ordinary in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PTL LTD Ordinary and Dawson Geophysical 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 Dawson Geophysical are associated (or correlated) with PTL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PTL LTD Ordinary has no effect on the direction of Dawson Geophysical i.e., Dawson Geophysical and PTL go up and down completely randomly.

Pair Corralation between Dawson Geophysical and PTL

Given the investment horizon of 90 days Dawson Geophysical is expected to generate 10.35 times less return on investment than PTL. But when comparing it to its historical volatility, Dawson Geophysical is 3.63 times less risky than PTL. It trades about 0.07 of its potential returns per unit of risk. PTL LTD Ordinary is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  762.00  in PTL LTD Ordinary on October 10, 2024 and sell it today you would earn a total of  338.00  from holding PTL LTD Ordinary or generate 44.36% return on investment over 90 days.

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

Dawson Geophysical  vs.  PTL LTD Ordinary

Dawson Geophysical

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dawson Geophysical has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Dawson Geophysical is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

PTL LTD Ordinary

Risk-Adjusted Performance

16 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in PTL LTD Ordinary are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile essential indicators, PTL exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Dawson Geophysical and PTL

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

The idea behind Dawson Geophysical and PTL LTD Ordinary 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.