Correlation Between Storage Vault and AKITA Drilling

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

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

Diversification Opportunities for Storage Vault and AKITA Drilling

-0.19

Correlation Coefficient

Storage Vault  AKITA Drilling

Good diversification

The 3 months correlation between Storage and AKITA is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Storage Vault Canada and AKITA Drilling in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AKITA Drilling and Storage Vault 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 Storage Vault Canada 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 Storage Vault i.e., Storage Vault and AKITA Drilling go up and down completely randomly.

Pair Corralation between Storage Vault and AKITA Drilling

Assuming the 90 days trading horizon Storage Vault Canada is expected to under-perform the AKITA Drilling. But the stock apears to be less risky and, when comparing its historical volatility, Storage Vault Canada is 1.08 times less risky than AKITA Drilling. The stock trades about -0.01 of its potential returns per unit of risk. The AKITA Drilling is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  161.00  in AKITA Drilling on November 29, 2024 and sell it today you would earn a total of  4.00  from holding AKITA Drilling or generate 2.48% return on investment over 90 days.

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

Storage Vault Canada  vs.  AKITA Drilling

Storage Vault Canada

Risk-Adjusted Performance

Very Weak

Over the last 90 days Storage Vault Canada has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy forward indicators, Storage Vault is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

AKITA Drilling

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in AKITA Drilling are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, AKITA Drilling is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Storage Vault and AKITA Drilling

The main advantage of trading using opposite Storage Vault and AKITA Drilling positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Storage Vault 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 Storage Vault Canada 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.