Correlation Between Precision Drilling and Pentagon I

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

By analyzing existing cross correlation between Precision Drilling and Pentagon I Capital, you can compare the effects of market volatilities on Precision Drilling and Pentagon I 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 Pentagon I. Check out your portfolio center. Please also check ongoing floating volatility patterns of Precision Drilling and Pentagon I.

Diversification Opportunities for Precision Drilling and Pentagon I

0.22

Correlation Coefficient

Precision Drilling  Pentagon I

Modest diversification

The 3 months correlation between Precision and Pentagon is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Precision Drilling and Pentagon I Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pentagon I Capital 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 Pentagon I. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pentagon I Capital has no effect on the direction of Precision Drilling i.e., Precision Drilling and Pentagon I go up and down completely randomly.

Pair Corralation between Precision Drilling and Pentagon I

Assuming the 90 days horizon Precision Drilling is expected to generate 0.13 times more return on investment than Pentagon I. However, Precision Drilling is 7.91 times less risky than Pentagon I. It trades about -0.18 of its potential returns per unit of risk. Pentagon I Capital is currently generating about -0.16 per unit of risk. If you would invest  9,034  in Precision Drilling on September 25, 2024 and sell it today you would lose (656.00) from holding Precision Drilling or give up 7.26% of portfolio value over 90 days.

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

Precision Drilling  vs.  Pentagon I Capital

Precision Drilling

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pentagon I Capital

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pentagon I Capital has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Precision Drilling and Pentagon I

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

The idea behind Precision Drilling and Pentagon I Capital 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 CEOs Directory module to screen CEOs from public companies around the world.