Correlation Between Precision Drilling and Intchains Group

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

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

Diversification Opportunities for Precision Drilling and Intchains Group

0.45

Correlation Coefficient

Precision Drilling  Intchains Group

Very weak diversification

The 3 months correlation between Precision and Intchains is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Precision Drilling and Intchains Group Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Intchains Group and Precision 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 Precision Drilling are associated (or correlated) with Intchains Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Intchains Group has no effect on the direction of Precision Drilling i.e., Precision Drilling and Intchains Group go up and down completely randomly.

Pair Corralation between Precision Drilling and Intchains Group

Considering the 90-day investment horizon Precision Drilling is expected to generate 0.31 times more return on investment than Intchains Group. However, Precision Drilling is 3.27 times less risky than Intchains Group. It trades about -0.04 of its potential returns per unit of risk. Intchains Group Limited is currently generating about -0.02 per unit of risk. If you would invest  6,702  in Precision Drilling on September 4, 2024 and sell it today you would lose (461.00) from holding Precision Drilling or give up 6.88% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.44%
Values	Daily Returns

Precision Drilling  vs.  Intchains Group Limited

Precision Drilling

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Precision Drilling has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable fundamental indicators, Precision Drilling is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Intchains Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Intchains Group Limited 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.

Pair Trading with Precision Drilling and Intchains Group

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

The idea behind Precision Drilling and Intchains Group Limited 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.