Correlation Between Plexus Corp and Awilco Drilling

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

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

Diversification Opportunities for Plexus Corp and Awilco Drilling

0.54

Correlation Coefficient

Plexus Corp  Awilco Drilling

Very weak diversification

The 3 months correlation between Plexus and Awilco is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Plexus Corp and Awilco Drilling PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Awilco Drilling PLC and Plexus Corp 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 Plexus Corp are associated (or correlated) with Awilco Drilling. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Awilco Drilling PLC has no effect on the direction of Plexus Corp i.e., Plexus Corp and Awilco Drilling go up and down completely randomly.

Pair Corralation between Plexus Corp and Awilco Drilling

Given the investment horizon of 90 days Plexus Corp is expected to generate 0.91 times more return on investment than Awilco Drilling. However, Plexus Corp is 1.1 times less risky than Awilco Drilling. It trades about 0.06 of its potential returns per unit of risk. Awilco Drilling PLC is currently generating about 0.05 per unit of risk. If you would invest  9,687  in Plexus Corp on December 11, 2024 and sell it today you would earn a total of  2,600  from holding Plexus Corp or generate 26.84% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.16%
Values	Daily Returns

Plexus Corp  vs.  Awilco Drilling PLC

Plexus Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Plexus Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Awilco Drilling PLC

Risk-Adjusted Performance

Very Weak

Over the last 90 days Awilco Drilling PLC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable fundamental indicators, Awilco Drilling is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Plexus Corp and Awilco Drilling

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

The idea behind Plexus Corp and Awilco Drilling PLC 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..