Correlation Between AKITA Drilling and Superior Plus

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

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

Diversification Opportunities for AKITA Drilling and Superior Plus

-0.55

Correlation Coefficient

AKITA Drilling  Superior Plus

Excellent diversification

The 3 months correlation between AKITA and Superior is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding AKITA Drilling and Superior Plus Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Superior Plus Corp and AKITA 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 AKITA Drilling are associated (or correlated) with Superior Plus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Superior Plus Corp has no effect on the direction of AKITA Drilling i.e., AKITA Drilling and Superior Plus go up and down completely randomly.

Pair Corralation between AKITA Drilling and Superior Plus

Assuming the 90 days trading horizon AKITA Drilling is expected to generate 15.69 times less return on investment than Superior Plus. But when comparing it to its historical volatility, AKITA Drilling is 2.79 times less risky than Superior Plus. It trades about 0.01 of its potential returns per unit of risk. Superior Plus Corp is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  610.00  in Superior Plus Corp on September 27, 2024 and sell it today you would earn a total of  22.00  from holding Superior Plus Corp or generate 3.61% return on investment over 90 days.

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

AKITA Drilling  vs.  Superior Plus Corp

AKITA Drilling

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in AKITA Drilling are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating basic indicators, AKITA Drilling may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Superior Plus Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Superior Plus Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's fundamental drivers remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with AKITA Drilling and Superior Plus

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

The idea behind AKITA Drilling and Superior Plus Corp 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.

Check out your portfolio center.

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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.