Correlation Between THORNEY TECHS and PRECISION DRILLING

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

By analyzing existing cross correlation between THORNEY TECHS LTD and PRECISION DRILLING P, you can compare the effects of market volatilities on THORNEY TECHS and PRECISION 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 THORNEY TECHS with a short position of PRECISION DRILLING. Check out your portfolio center. Please also check ongoing floating volatility patterns of THORNEY TECHS and PRECISION DRILLING.

Diversification Opportunities for THORNEY TECHS and PRECISION DRILLING

-0.13

Correlation Coefficient

THORNEY TECHS  PRECISION DRILLING

Good diversification

The 3 months correlation between THORNEY and PRECISION is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding THORNEY TECHS LTD and PRECISION DRILLING P in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PRECISION DRILLING and THORNEY TECHS 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 THORNEY TECHS LTD are associated (or correlated) with PRECISION DRILLING. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PRECISION DRILLING has no effect on the direction of THORNEY TECHS i.e., THORNEY TECHS and PRECISION DRILLING go up and down completely randomly.

Pair Corralation between THORNEY TECHS and PRECISION DRILLING

Assuming the 90 days horizon THORNEY TECHS LTD is expected to generate 2.11 times more return on investment than PRECISION DRILLING. However, THORNEY TECHS is 2.11 times more volatile than PRECISION DRILLING P. It trades about 0.05 of its potential returns per unit of risk. PRECISION DRILLING P is currently generating about 0.0 per unit of risk. If you would invest  6.55  in THORNEY TECHS LTD on September 14, 2024 and sell it today you would earn a total of  1.10  from holding THORNEY TECHS LTD or generate 16.79% return on investment over 90 days.

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

THORNEY TECHS LTD  vs.  PRECISION DRILLING P

THORNEY TECHS LTD

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in THORNEY TECHS LTD are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, THORNEY TECHS may actually be approaching a critical reversion point that can send shares even higher in January 2025.

PRECISION DRILLING

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in PRECISION DRILLING P are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable technical and fundamental indicators, PRECISION DRILLING is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with THORNEY TECHS and PRECISION DRILLING

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

The idea behind THORNEY TECHS LTD and PRECISION DRILLING P 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.