Correlation Between Patterson UTI and Anglo American

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

By analyzing existing cross correlation between Patterson UTI Energy and Anglo American Platinum, you can compare the effects of market volatilities on Patterson UTI and Anglo American 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 Patterson UTI with a short position of Anglo American. Check out your portfolio center. Please also check ongoing floating volatility patterns of Patterson UTI and Anglo American.

Diversification Opportunities for Patterson UTI and Anglo American

-0.05

Correlation Coefficient

Patterson UTI  Anglo American

Good diversification

The 3 months correlation between Patterson and Anglo is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Patterson UTI Energy and Anglo American Platinum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Anglo American Platinum and Patterson UTI 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 Patterson UTI Energy are associated (or correlated) with Anglo American. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Anglo American Platinum has no effect on the direction of Patterson UTI i.e., Patterson UTI and Anglo American go up and down completely randomly.

Pair Corralation between Patterson UTI and Anglo American

Given the investment horizon of 90 days Patterson UTI Energy is expected to generate 0.96 times more return on investment than Anglo American. However, Patterson UTI Energy is 1.04 times less risky than Anglo American. It trades about 0.18 of its potential returns per unit of risk. Anglo American Platinum is currently generating about 0.04 per unit of risk. If you would invest  781.00  in Patterson UTI Energy on October 12, 2024 and sell it today you would earn a total of  61.00  from holding Patterson UTI Energy or generate 7.81% return on investment over 90 days.

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

Patterson UTI Energy  vs.  Anglo American Platinum

Patterson UTI Energy

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Patterson UTI Energy are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy technical and fundamental indicators, Patterson UTI is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Anglo American Platinum

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Anglo American Platinum has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Patterson UTI and Anglo American

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

The idea behind Patterson UTI Energy and Anglo American Platinum 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.