Correlation Between Magnis Resources and PRECISION DRILLING

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

By analyzing existing cross correlation between Magnis Resources Limited and PRECISION DRILLING P, you can compare the effects of market volatilities on Magnis Resources and PRECISION 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 Magnis Resources with a short position of PRECISION DRILLING. Check out your portfolio center. Please also check ongoing floating volatility patterns of Magnis Resources and PRECISION DRILLING.

Diversification Opportunities for Magnis Resources and PRECISION DRILLING

0.0

Correlation Coefficient

Magnis Resources  PRECISION DRILLING

Pay attention - limited upside

The 3 months correlation between Magnis and PRECISION is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Magnis Resources Limited and PRECISION DRILLING P in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PRECISION DRILLING and Magnis Resources 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 Magnis Resources Limited are associated (or correlated) with PRECISION DRILLING. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PRECISION DRILLING has no effect on the direction of Magnis Resources i.e., Magnis Resources and PRECISION DRILLING go up and down completely randomly.

Pair Corralation between Magnis Resources and PRECISION DRILLING

Assuming the 90 days trading horizon Magnis Resources Limited is expected to under-perform the PRECISION DRILLING. In addition to that, Magnis Resources is 1.39 times more volatile than PRECISION DRILLING P. It trades about -0.08 of its total potential returns per unit of risk. PRECISION DRILLING P is currently generating about 0.0 per unit of volatility. If you would invest  7,400  in PRECISION DRILLING P on October 10, 2024 and sell it today you would lose (1,300) from holding PRECISION DRILLING P or give up 17.57% of portfolio value over 90 days.

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

Magnis Resources Limited  vs.  PRECISION DRILLING P

Magnis Resources

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Magnis Resources Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Magnis Resources is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

PRECISION DRILLING

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in PRECISION DRILLING P are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain technical and fundamental indicators, PRECISION DRILLING may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Magnis Resources and PRECISION DRILLING

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

The idea behind Magnis Resources Limited and PRECISION DRILLING P 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.