Correlation Between Renoworks Software and Stampede Drilling

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

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

Diversification Opportunities for Renoworks Software and Stampede Drilling

-0.57

Correlation Coefficient

Renoworks Software  Stampede Drilling

Excellent diversification

The 3 months correlation between Renoworks and Stampede is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Renoworks Software and Stampede Drilling in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stampede Drilling and Renoworks Software 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 Renoworks Software are associated (or correlated) with Stampede Drilling. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stampede Drilling has no effect on the direction of Renoworks Software i.e., Renoworks Software and Stampede Drilling go up and down completely randomly.

Pair Corralation between Renoworks Software and Stampede Drilling

Given the investment horizon of 90 days Renoworks Software is expected to under-perform the Stampede Drilling. But the stock apears to be less risky and, when comparing its historical volatility, Renoworks Software is 1.11 times less risky than Stampede Drilling. The stock trades about -0.15 of its potential returns per unit of risk. The Stampede Drilling is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  18.00  in Stampede Drilling on October 6, 2024 and sell it today you would earn a total of  0.00  from holding Stampede Drilling or generate 0.0% return on investment over 90 days.

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

Renoworks Software  vs.  Stampede Drilling

Renoworks Software

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Renoworks Software are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Renoworks Software showed solid returns over the last few months and may actually be approaching a breakup point.

Stampede Drilling

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Stampede Drilling has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in February 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Renoworks Software and Stampede Drilling

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

The idea behind Renoworks Software and Stampede Drilling 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.