Correlation Between PRECISION DRILLING and Jupiter Energy

Can any of the company-specific risk be diversified away by investing in both PRECISION DRILLING and Jupiter Energy 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 Jupiter Energy 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 Jupiter Energy Limited, you can compare the effects of market volatilities on PRECISION DRILLING and Jupiter Energy 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 Jupiter Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of PRECISION DRILLING and Jupiter Energy.

Diversification Opportunities for PRECISION DRILLING and Jupiter Energy

-0.29

Correlation Coefficient

PRECISION DRILLING  Jupiter Energy

Very good diversification

The 3 months correlation between PRECISION and Jupiter is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding PRECISION DRILLING P and Jupiter Energy Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jupiter Energy 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 Jupiter Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jupiter Energy has no effect on the direction of PRECISION DRILLING i.e., PRECISION DRILLING and Jupiter Energy go up and down completely randomly.

Pair Corralation between PRECISION DRILLING and Jupiter Energy

Assuming the 90 days trading horizon PRECISION DRILLING P is expected to under-perform the Jupiter Energy. But the stock apears to be less risky and, when comparing its historical volatility, PRECISION DRILLING P is 13.75 times less risky than Jupiter Energy. The stock trades about -0.17 of its potential returns per unit of risk. The Jupiter Energy Limited is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  1.10  in Jupiter Energy Limited on December 22, 2024 and sell it today you would earn a total of  0.30  from holding Jupiter Energy Limited or generate 27.27% return on investment over 90 days.

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

PRECISION DRILLING P  vs.  Jupiter Energy Limited

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.

Jupiter Energy

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Jupiter Energy Limited are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Jupiter Energy reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with PRECISION DRILLING and Jupiter Energy

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

The idea behind PRECISION DRILLING P and Jupiter Energy 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.