Correlation Between Awilco Drilling and Mid Atlantic

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

By analyzing existing cross correlation between Awilco Drilling PLC and Mid Atlantic Home Health, you can compare the effects of market volatilities on Awilco Drilling and Mid Atlantic 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 Awilco Drilling with a short position of Mid Atlantic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Awilco Drilling and Mid Atlantic.

Diversification Opportunities for Awilco Drilling and Mid Atlantic

0.0

Correlation Coefficient

Awilco Drilling  Mid Atlantic

Pay attention - limited upside

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

Pair Corralation between Awilco Drilling and Mid Atlantic

Assuming the 90 days horizon Awilco Drilling PLC is expected to generate 9.42 times more return on investment than Mid Atlantic. However, Awilco Drilling is 9.42 times more volatile than Mid Atlantic Home Health. It trades about 0.05 of its potential returns per unit of risk. Mid Atlantic Home Health is currently generating about -0.06 per unit of risk. If you would invest  1,000.00  in Awilco Drilling PLC on September 30, 2024 and sell it today you would lose (819.00) from holding Awilco Drilling PLC or give up 81.9% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	99.6%
Values	Daily Returns

Awilco Drilling PLC  vs.  Mid Atlantic Home Health

Awilco Drilling PLC

Risk-Adjusted Performance

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Very Weak

Over the last 90 days Awilco Drilling PLC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Mid Atlantic Home

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mid Atlantic Home Health has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy technical indicators, Mid Atlantic is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Awilco Drilling and Mid Atlantic

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

The idea behind Awilco Drilling PLC and Mid Atlantic Home Health 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.