Correlation Between Stampede Drilling and Opus One

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

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

Diversification Opportunities for Stampede Drilling and Opus One

-0.45

Correlation Coefficient

Stampede Drilling  Opus One

Very good diversification

The 3 months correlation between Stampede and Opus is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Stampede Drilling and Opus One Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Opus One Resources 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 Opus One. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Opus One Resources has no effect on the direction of Stampede Drilling i.e., Stampede Drilling and Opus One go up and down completely randomly.

Pair Corralation between Stampede Drilling and Opus One

Assuming the 90 days horizon Stampede Drilling is expected to under-perform the Opus One. But the stock apears to be less risky and, when comparing its historical volatility, Stampede Drilling is 1.86 times less risky than Opus One. The stock trades about -0.05 of its potential returns per unit of risk. The Opus One Resources is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  5.00  in Opus One Resources on December 21, 2024 and sell it today you would earn a total of  2.00  from holding Opus One Resources or generate 40.0% return on investment over 90 days.

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

Stampede Drilling  vs.  Opus One Resources

Stampede Drilling

Risk-Adjusted Performance

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 April 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Opus One Resources

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Opus One Resources are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Opus One showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Stampede Drilling and Opus One

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

The idea behind Stampede Drilling and Opus One Resources 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.