Correlation Between Comstock Holding and Drilling Tools

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

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

Diversification Opportunities for Comstock Holding and Drilling Tools

-0.57

Correlation Coefficient

Comstock Holding  Drilling Tools

Excellent diversification

The 3 months correlation between Comstock and Drilling is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Comstock Holding Companies and Drilling Tools International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Drilling Tools Inter and Comstock Holding 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 Comstock Holding Companies are associated (or correlated) with Drilling Tools. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Drilling Tools Inter has no effect on the direction of Comstock Holding i.e., Comstock Holding and Drilling Tools go up and down completely randomly.

Pair Corralation between Comstock Holding and Drilling Tools

Given the investment horizon of 90 days Comstock Holding Companies is expected to generate 1.57 times more return on investment than Drilling Tools. However, Comstock Holding is 1.57 times more volatile than Drilling Tools International. It trades about 0.04 of its potential returns per unit of risk. Drilling Tools International is currently generating about -0.05 per unit of risk. If you would invest  766.00  in Comstock Holding Companies on September 3, 2024 and sell it today you would earn a total of  50.00  from holding Comstock Holding Companies or generate 6.53% return on investment over 90 days.

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

Comstock Holding Companies  vs.  Drilling Tools International

Comstock Holding Com

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Comstock Holding Companies are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite fairly unsteady fundamental indicators, Comstock Holding demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Drilling Tools Inter

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Drilling Tools International has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's basic indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Pair Trading with Comstock Holding and Drilling Tools

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

The idea behind Comstock Holding Companies and Drilling Tools International 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.