Correlation Between Vantage Drilling and White River

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

By analyzing existing cross correlation between Vantage Drilling International and White River Energy, you can compare the effects of market volatilities on Vantage Drilling and White River 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 Vantage Drilling with a short position of White River. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vantage Drilling and White River.

Diversification Opportunities for Vantage Drilling and White River

0.58

Correlation Coefficient

Vantage Drilling  White River

Very weak diversification

The 3 months correlation between Vantage and White is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Vantage Drilling International and White River Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on White River Energy and Vantage 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 Vantage Drilling International are associated (or correlated) with White River. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of White River Energy has no effect on the direction of Vantage Drilling i.e., Vantage Drilling and White River go up and down completely randomly.

Pair Corralation between Vantage Drilling and White River

Assuming the 90 days horizon Vantage Drilling International is expected to under-perform the White River. But the pink sheet apears to be less risky and, when comparing its historical volatility, Vantage Drilling International is 357.06 times less risky than White River. The pink sheet trades about -0.13 of its potential returns per unit of risk. The White River Energy is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  200.00  in White River Energy on October 10, 2024 and sell it today you would lose (200.00) from holding White River Energy or give up 100.0% of portfolio value over 90 days.

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

Vantage Drilling International  vs.  White River Energy

Vantage Drilling Int

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vantage Drilling International has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Vantage Drilling is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

White River Energy

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in White River Energy are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile basic indicators, White River showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Vantage Drilling and White River

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

The idea behind Vantage Drilling International and White River Energy 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.