Correlation Between Stampede Drilling and Sirona Biochem

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

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

Diversification Opportunities for Stampede Drilling and Sirona Biochem

0.3

Correlation Coefficient

Stampede Drilling  Sirona Biochem

Weak diversification

The 3 months correlation between Stampede and Sirona is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Stampede Drilling and Sirona Biochem Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sirona Biochem Corp 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 Sirona Biochem. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sirona Biochem Corp has no effect on the direction of Stampede Drilling i.e., Stampede Drilling and Sirona Biochem go up and down completely randomly.

Pair Corralation between Stampede Drilling and Sirona Biochem

Assuming the 90 days horizon Stampede Drilling is expected to under-perform the Sirona Biochem. But the stock apears to be less risky and, when comparing its historical volatility, Stampede Drilling is 4.74 times less risky than Sirona Biochem. The stock trades about -0.09 of its potential returns per unit of risk. The Sirona Biochem Corp is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  6.00  in Sirona Biochem Corp on October 10, 2024 and sell it today you would earn a total of  0.50  from holding Sirona Biochem Corp or generate 8.33% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.0%
Values	Daily Returns

Stampede Drilling  vs.  Sirona Biochem Corp

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.

Sirona Biochem Corp

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Sirona Biochem Corp are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Sirona Biochem may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Stampede Drilling and Sirona Biochem

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

The idea behind Stampede Drilling and Sirona Biochem Corp 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.