Correlation Between Precision Drilling and Evertz Technologies

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

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

Diversification Opportunities for Precision Drilling and Evertz Technologies

0.6

Correlation Coefficient

Precision Drilling  Evertz Technologies

Poor diversification

The 3 months correlation between Precision and Evertz is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Precision Drilling and Evertz Technologies Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Evertz Technologies and Precision 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 Precision Drilling are associated (or correlated) with Evertz Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Evertz Technologies has no effect on the direction of Precision Drilling i.e., Precision Drilling and Evertz Technologies go up and down completely randomly.

Pair Corralation between Precision Drilling and Evertz Technologies

Assuming the 90 days horizon Precision Drilling is expected to generate 1.8 times more return on investment than Evertz Technologies. However, Precision Drilling is 1.8 times more volatile than Evertz Technologies Limited. It trades about 0.15 of its potential returns per unit of risk. Evertz Technologies Limited is currently generating about 0.13 per unit of risk. If you would invest  8,023  in Precision Drilling on October 23, 2024 and sell it today you would earn a total of  1,569  from holding Precision Drilling or generate 19.56% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Precision Drilling  vs.  Evertz Technologies Limited

Precision Drilling

Risk-Adjusted Performance

11 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Precision Drilling are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Precision Drilling displayed solid returns over the last few months and may actually be approaching a breakup point.

Evertz Technologies

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Evertz Technologies Limited are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Evertz Technologies may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Precision Drilling and Evertz Technologies

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

The idea behind Precision Drilling and Evertz Technologies Limited 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.