Correlation Between Stampede Drilling and AKITA Drilling

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

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

Diversification Opportunities for Stampede Drilling and AKITA Drilling

-0.37

Correlation Coefficient

Stampede Drilling  AKITA Drilling

Very good diversification

The 3 months correlation between Stampede and AKITA is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Stampede Drilling and AKITA Drilling in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AKITA Drilling and Stampede 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 Stampede Drilling are associated (or correlated) with AKITA Drilling. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AKITA Drilling has no effect on the direction of Stampede Drilling i.e., Stampede Drilling and AKITA Drilling go up and down completely randomly.

Pair Corralation between Stampede Drilling and AKITA Drilling

Assuming the 90 days horizon Stampede Drilling is expected to generate 1.17 times less return on investment than AKITA Drilling. In addition to that, Stampede Drilling is 1.94 times more volatile than AKITA Drilling. It trades about 0.1 of its total potential returns per unit of risk. AKITA Drilling is currently generating about 0.23 per unit of volatility. If you would invest  159.00  in AKITA Drilling on October 25, 2024 and sell it today you would earn a total of  12.00  from holding AKITA Drilling or generate 7.55% return on investment over 90 days.

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

Stampede Drilling  vs.  AKITA Drilling

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 latest weak performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

AKITA Drilling

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in AKITA Drilling are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, AKITA Drilling may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Stampede Drilling and AKITA Drilling

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

The idea behind Stampede Drilling and AKITA 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.