Correlation Between Air Transport and AKITA Drilling

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

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

Diversification Opportunities for Air Transport and AKITA Drilling

0.18

Correlation Coefficient

Air Transport  AKITA Drilling

Average diversification

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

Pair Corralation between Air Transport and AKITA Drilling

Given the investment horizon of 90 days Air Transport is expected to generate 1.47 times less return on investment than AKITA Drilling. In addition to that, Air Transport is 1.1 times more volatile than AKITA Drilling. It trades about 0.01 of its total potential returns per unit of risk. AKITA Drilling is currently generating about 0.01 per unit of volatility. If you would invest  116.00  in AKITA Drilling on September 26, 2024 and sell it today you would lose (5.00) from holding AKITA Drilling or give up 4.31% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	99.8%
Values	Daily Returns

Air Transport Services  vs.  AKITA Drilling

Air Transport Services

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Air Transport Services are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Air Transport reported solid returns over the last few months and may actually be approaching a breakup point.

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 Air Transport and AKITA Drilling

The main advantage of trading using opposite Air Transport and AKITA Drilling positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Air Transport 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 Air Transport Services 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.