Correlation Between Master Drilling and Astoria Investments

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

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

Diversification Opportunities for Master Drilling and Astoria Investments

-0.48

Correlation Coefficient

Master Drilling  Astoria Investments

Very good diversification

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

Pair Corralation between Master Drilling and Astoria Investments

Assuming the 90 days trading horizon Master Drilling Group is expected to under-perform the Astoria Investments. In addition to that, Master Drilling is 1.51 times more volatile than Astoria Investments. It trades about -0.08 of its total potential returns per unit of risk. Astoria Investments is currently generating about 0.11 per unit of volatility. If you would invest  82,500  in Astoria Investments on September 24, 2024 and sell it today you would earn a total of  2,500  from holding Astoria Investments or generate 3.03% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	95.24%
Values	Daily Returns

Master Drilling Group  vs.  Astoria Investments

Master Drilling Group

Risk-Adjusted Performance

1 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Master Drilling Group are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Master Drilling is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Astoria Investments

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Astoria Investments has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Astoria Investments is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Master Drilling and Astoria Investments

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

The idea behind Master Drilling Group and Astoria Investments 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 .