Correlation Between 78409VBL7 and AKITA Drilling

Can any of the company-specific risk be diversified away by investing in both 78409VBL7 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 78409VBL7 and AKITA Drilling into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between SPGI 37 01 MAR 52 and AKITA Drilling, you can compare the effects of market volatilities on 78409VBL7 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 78409VBL7 with a short position of AKITA Drilling. Check out your portfolio center. Please also check ongoing floating volatility patterns of 78409VBL7 and AKITA Drilling.

Diversification Opportunities for 78409VBL7 and AKITA Drilling

-0.18

Correlation Coefficient

78409VBL7  AKITA Drilling

Good diversification

The 3 months correlation between 78409VBL7 and AKITA is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding SPGI 37 01 MAR 52 and AKITA Drilling in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AKITA Drilling and 78409VBL7 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 SPGI 37 01 MAR 52 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 78409VBL7 i.e., 78409VBL7 and AKITA Drilling go up and down completely randomly.

Pair Corralation between 78409VBL7 and AKITA Drilling

Assuming the 90 days trading horizon SPGI 37 01 MAR 52 is expected to under-perform the AKITA Drilling. In addition to that, 78409VBL7 is 1.12 times more volatile than AKITA Drilling. It trades about -0.05 of its total potential returns per unit of risk. AKITA Drilling is currently generating about 0.04 per unit of volatility. If you would invest  116.00  in AKITA Drilling on October 23, 2024 and sell it today you would earn a total of  4.00  from holding AKITA Drilling or generate 3.45% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	83.61%
Values	Daily Returns

SPGI 37 01 MAR 52  vs.  AKITA Drilling

SPGI 37 01

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SPGI 37 01 MAR 52 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 78409VBL7 is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

AKITA Drilling

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in AKITA Drilling are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, AKITA Drilling is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with 78409VBL7 and AKITA Drilling

The main advantage of trading using opposite 78409VBL7 and AKITA Drilling positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 78409VBL7 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 SPGI 37 01 MAR 52 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.