Correlation Between Dolphin Drilling and Awilco Drilling

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

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

Diversification Opportunities for Dolphin Drilling and Awilco Drilling

-0.24

Correlation Coefficient

Dolphin Drilling  Awilco Drilling

Very good diversification

The 3 months correlation between Dolphin and Awilco is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Dolphin Drilling AS and Awilco Drilling PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Awilco Drilling PLC and Dolphin 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 Dolphin Drilling AS are associated (or correlated) with Awilco Drilling. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Awilco Drilling PLC has no effect on the direction of Dolphin Drilling i.e., Dolphin Drilling and Awilco Drilling go up and down completely randomly.

Pair Corralation between Dolphin Drilling and Awilco Drilling

Assuming the 90 days trading horizon Dolphin Drilling AS is expected to under-perform the Awilco Drilling. But the stock apears to be less risky and, when comparing its historical volatility, Dolphin Drilling AS is 1.17 times less risky than Awilco Drilling. The stock trades about -0.03 of its potential returns per unit of risk. The Awilco Drilling PLC is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  2,310  in Awilco Drilling PLC on September 2, 2024 and sell it today you would lose (200.00) from holding Awilco Drilling PLC or give up 8.66% of portfolio value over 90 days.

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

Dolphin Drilling AS  vs.  Awilco Drilling PLC

Dolphin Drilling

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dolphin Drilling AS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest conflicting performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Awilco Drilling PLC

Risk-Adjusted Performance

0 of 100

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 quite persistent essential indicators, Awilco Drilling is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Dolphin Drilling and Awilco Drilling

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

The idea behind Dolphin Drilling AS and Awilco Drilling PLC 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..