Correlation Between Delek Drilling and PagSeguro Digital

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

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

Diversification Opportunities for Delek Drilling and PagSeguro Digital

-0.29

Correlation Coefficient

Delek Drilling  PagSeguro Digital

Very good diversification

The 3 months correlation between Delek and PagSeguro is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Delek Drilling and PagSeguro Digital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PagSeguro Digital and Delek 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 Delek Drilling are associated (or correlated) with PagSeguro Digital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PagSeguro Digital has no effect on the direction of Delek Drilling i.e., Delek Drilling and PagSeguro Digital go up and down completely randomly.

Pair Corralation between Delek Drilling and PagSeguro Digital

Assuming the 90 days horizon Delek Drilling is expected to under-perform the PagSeguro Digital. But the otc stock apears to be less risky and, when comparing its historical volatility, Delek Drilling is 1.44 times less risky than PagSeguro Digital. The otc stock trades about -0.01 of its potential returns per unit of risk. The PagSeguro Digital is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  703.00  in PagSeguro Digital on March 1, 2025 and sell it today you would earn a total of  165.00  from holding PagSeguro Digital or generate 23.47% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	96.88%
Values	Daily Returns

Delek Drilling   vs.  PagSeguro Digital

Delek Drilling

Risk-Adjusted Performance

Very Weak

Over the last 90 days Delek Drilling has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Delek Drilling is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

PagSeguro Digital

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in PagSeguro Digital are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak technical and fundamental indicators, PagSeguro Digital unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Delek Drilling and PagSeguro Digital

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

The idea behind Delek Drilling and PagSeguro Digital 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.