Correlation Between Queens Road and AKITA Drilling

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

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

Diversification Opportunities for Queens Road and AKITA Drilling

-0.13

Correlation Coefficient

Queens Road  AKITA Drilling

Good diversification

The 3 months correlation between Queens and AKITA is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Queens Road Capital and AKITA Drilling in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AKITA Drilling and Queens Road 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 Queens Road Capital 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 Queens Road i.e., Queens Road and AKITA Drilling go up and down completely randomly.

Pair Corralation between Queens Road and AKITA Drilling

Assuming the 90 days trading horizon Queens Road Capital is expected to under-perform the AKITA Drilling. In addition to that, Queens Road is 1.73 times more volatile than AKITA Drilling. It trades about -0.18 of its total potential returns per unit of risk. AKITA Drilling is currently generating about -0.02 per unit of volatility. If you would invest  161.00  in AKITA Drilling on September 30, 2024 and sell it today you would lose (1.00) from holding AKITA Drilling or give up 0.62% of portfolio value over 90 days.

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

Queens Road Capital  vs.  AKITA Drilling

Queens Road Capital

Risk-Adjusted Performance

0 of 100

Very Weak

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

AKITA Drilling

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in AKITA Drilling are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating basic indicators, AKITA Drilling may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Queens Road and AKITA Drilling

The main advantage of trading using opposite Queens Road and AKITA Drilling positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Queens Road 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 Queens Road Capital 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.

Check out your portfolio center.

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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.