Correlation Between PRECISION DRILLING and Amazon

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

By analyzing existing cross correlation between PRECISION DRILLING P and Amazon Inc, you can compare the effects of market volatilities on PRECISION DRILLING and Amazon 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 Amazon. Check out your portfolio center. Please also check ongoing floating volatility patterns of PRECISION DRILLING and Amazon.

Diversification Opportunities for PRECISION DRILLING and Amazon

0.84

Correlation Coefficient

PRECISION DRILLING  Amazon

Very poor diversification

The 3 months correlation between PRECISION and Amazon is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding PRECISION DRILLING P and Amazon Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amazon Inc 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 P are associated (or correlated) with Amazon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amazon Inc has no effect on the direction of PRECISION DRILLING i.e., PRECISION DRILLING and Amazon go up and down completely randomly.

Pair Corralation between PRECISION DRILLING and Amazon

Assuming the 90 days trading horizon PRECISION DRILLING P is expected to under-perform the Amazon. In addition to that, PRECISION DRILLING is 1.53 times more volatile than Amazon Inc. It trades about -0.16 of its total potential returns per unit of risk. Amazon Inc is currently generating about -0.18 per unit of volatility. If you would invest  21,655  in Amazon Inc on December 23, 2024 and sell it today you would lose (3,597) from holding Amazon Inc or give up 16.61% of portfolio value over 90 days.

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

PRECISION DRILLING P  vs.  Amazon Inc

PRECISION DRILLING

Risk-Adjusted Performance

Very Weak

Over the last 90 days PRECISION DRILLING P has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's technical and fundamental indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Amazon Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Amazon Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile 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.

Pair Trading with PRECISION DRILLING and Amazon

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

The idea behind PRECISION DRILLING P and Amazon Inc 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.