Correlation Between Uber Technologies and AKITA Drilling

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

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

Diversification Opportunities for Uber Technologies and AKITA Drilling

0.66

Correlation Coefficient

Uber Technologies  AKITA Drilling

Poor diversification

The 3 months correlation between Uber and AKITA is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Uber Technologies and AKITA Drilling in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AKITA Drilling and Uber Technologies 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 Uber Technologies 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 Uber Technologies i.e., Uber Technologies and AKITA Drilling go up and down completely randomly.

Pair Corralation between Uber Technologies and AKITA Drilling

Given the investment horizon of 90 days Uber Technologies is expected to under-perform the AKITA Drilling. In addition to that, Uber Technologies is 2.27 times more volatile than AKITA Drilling. It trades about -0.14 of its total potential returns per unit of risk. AKITA Drilling is currently generating about -0.32 per unit of volatility. If you would invest  109.00  in AKITA Drilling on February 26, 2024 and sell it today you would lose (7.00) from holding AKITA Drilling or give up 6.42% of portfolio value over 90 days.

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

Uber Technologies  vs.  AKITA Drilling

Uber Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Uber Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. Even with unfluctuating performance in the last few months, the Stock's technical and fundamental indicators remain relatively invariable which may send shares a bit higher in June 2024. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

AKITA Drilling

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AKITA Drilling has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, AKITA 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 Uber Technologies and AKITA Drilling

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

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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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.