Correlation Between AKITA Drilling and Open Text

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

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

Diversification Opportunities for AKITA Drilling and Open Text

0.76

Correlation Coefficient

AKITA Drilling  Open Text

Poor diversification

The 3 months correlation between AKITA and Open is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding AKITA Drilling and Open Text Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Open Text Corp and AKITA 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 AKITA Drilling are associated (or correlated) with Open Text. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Open Text Corp has no effect on the direction of AKITA Drilling i.e., AKITA Drilling and Open Text go up and down completely randomly.

Pair Corralation between AKITA Drilling and Open Text

Assuming the 90 days trading horizon AKITA Drilling is expected to generate 1.9 times more return on investment than Open Text. However, AKITA Drilling is 1.9 times more volatile than Open Text Corp. It trades about 0.16 of its potential returns per unit of risk. Open Text Corp is currently generating about 0.11 per unit of risk. If you would invest  169.00  in AKITA Drilling on April 24, 2025 and sell it today you would earn a total of  53.00  from holding AKITA Drilling or generate 31.36% return on investment over 90 days.

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

AKITA Drilling  vs.  Open Text Corp

AKITA Drilling

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in AKITA Drilling are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating basic indicators, AKITA Drilling unveiled solid returns over the last few months and may actually be approaching a breakup point.

Open Text Corp

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Open Text Corp are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain basic indicators, Open Text may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with AKITA Drilling and Open Text

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

The idea behind AKITA Drilling and Open Text Corp 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.