Correlation Between Trellidor Holdings and Master Drilling

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

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

Diversification Opportunities for Trellidor Holdings and Master Drilling

0.32

Correlation Coefficient

Trellidor Holdings  Master Drilling

Weak diversification

The 3 months correlation between Trellidor and Master is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Trellidor Holdings and Master Drilling Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Master Drilling Group and Trellidor Holdings 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 Trellidor Holdings are associated (or correlated) with Master Drilling. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Master Drilling Group has no effect on the direction of Trellidor Holdings i.e., Trellidor Holdings and Master Drilling go up and down completely randomly.

Pair Corralation between Trellidor Holdings and Master Drilling

Assuming the 90 days trading horizon Trellidor Holdings is expected to under-perform the Master Drilling. In addition to that, Trellidor Holdings is 1.0 times more volatile than Master Drilling Group. It trades about -0.14 of its total potential returns per unit of risk. Master Drilling Group is currently generating about 0.01 per unit of volatility. If you would invest  137,500  in Master Drilling Group on October 8, 2024 and sell it today you would lose (500.00) from holding Master Drilling Group or give up 0.36% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	97.44%
Values	Daily Returns

Trellidor Holdings  vs.  Master Drilling Group

Trellidor Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Trellidor Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Master Drilling Group

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Master Drilling Group are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Master Drilling is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Trellidor Holdings and Master Drilling

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

The idea behind Trellidor Holdings and Master Drilling Group 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.