Correlation Between Stampede Drilling and Amazon CDR

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

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

Diversification Opportunities for Stampede Drilling and Amazon CDR

-0.82

Correlation Coefficient

Stampede Drilling  Amazon CDR

Pay attention - limited upside

The 3 months correlation between Stampede and Amazon is -0.82. Overlapping area represents the amount of risk that can be diversified away by holding Stampede Drilling and Amazon CDR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amazon CDR and Stampede 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 Stampede Drilling are associated (or correlated) with Amazon CDR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amazon CDR has no effect on the direction of Stampede Drilling i.e., Stampede Drilling and Amazon CDR go up and down completely randomly.

Pair Corralation between Stampede Drilling and Amazon CDR

Assuming the 90 days horizon Stampede Drilling is expected to under-perform the Amazon CDR. In addition to that, Stampede Drilling is 1.82 times more volatile than Amazon CDR. It trades about -0.06 of its total potential returns per unit of risk. Amazon CDR is currently generating about 0.13 per unit of volatility. If you would invest  2,316  in Amazon CDR on September 23, 2024 and sell it today you would earn a total of  359.00  from holding Amazon CDR or generate 15.5% return on investment over 90 days.

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

Stampede Drilling  vs.  Amazon CDR

Stampede Drilling

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Stampede Drilling has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Amazon CDR

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Amazon CDR are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather abnormal technical and fundamental indicators, Amazon CDR exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Stampede Drilling and Amazon CDR

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

The idea behind Stampede Drilling and Amazon CDR 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..