Correlation Between PRECISION DRILLING and GRUPO CARSO

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

By analyzing existing cross correlation between PRECISION DRILLING P and GRUPO CARSO A1, you can compare the effects of market volatilities on PRECISION DRILLING and GRUPO CARSO 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 GRUPO CARSO. Check out your portfolio center. Please also check ongoing floating volatility patterns of PRECISION DRILLING and GRUPO CARSO.

Diversification Opportunities for PRECISION DRILLING and GRUPO CARSO

0.23

Correlation Coefficient

PRECISION DRILLING  GRUPO CARSO

Modest diversification

The 3 months correlation between PRECISION and GRUPO is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding PRECISION DRILLING P and GRUPO CARSO A1 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GRUPO CARSO A1 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 P are associated (or correlated) with GRUPO CARSO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GRUPO CARSO A1 has no effect on the direction of PRECISION DRILLING i.e., PRECISION DRILLING and GRUPO CARSO go up and down completely randomly.

Pair Corralation between PRECISION DRILLING and GRUPO CARSO

Assuming the 90 days trading horizon PRECISION DRILLING P is expected to under-perform the GRUPO CARSO. But the stock apears to be less risky and, when comparing its historical volatility, PRECISION DRILLING P is 1.38 times less risky than GRUPO CARSO. The stock trades about -0.15 of its potential returns per unit of risk. The GRUPO CARSO A1 is currently generating about -0.1 of returns per unit of risk over similar time horizon. If you would invest  785.00  in GRUPO CARSO A1 on March 10, 2024 and sell it today you would lose (65.00) from holding GRUPO CARSO A1 or give up 8.28% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

PRECISION DRILLING P  vs.  GRUPO CARSO A1

PRECISION DRILLING

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in PRECISION DRILLING P are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, PRECISION DRILLING may actually be approaching a critical reversion point that can send shares even higher in July 2024.

GRUPO CARSO A1

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GRUPO CARSO A1 has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, GRUPO CARSO is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with PRECISION DRILLING and GRUPO CARSO

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

The idea behind PRECISION DRILLING P and GRUPO CARSO A1 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.