Correlation Between Drilling Tools and Smart Digital

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

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

Diversification Opportunities for Drilling Tools and Smart Digital

-0.04

Correlation Coefficient

Drilling Tools  Smart Digital

Good diversification

The 3 months correlation between Drilling and Smart is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Drilling Tools International and Smart Digital Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Smart Digital Group and Drilling Tools 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 Drilling Tools International are associated (or correlated) with Smart Digital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Smart Digital Group has no effect on the direction of Drilling Tools i.e., Drilling Tools and Smart Digital go up and down completely randomly.

Pair Corralation between Drilling Tools and Smart Digital

Considering the 90-day investment horizon Drilling Tools International is expected to under-perform the Smart Digital. But the stock apears to be less risky and, when comparing its historical volatility, Drilling Tools International is 3.58 times less risky than Smart Digital. The stock trades about -0.06 of its potential returns per unit of risk. The Smart Digital Group is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  1,076  in Smart Digital Group on July 3, 2025 and sell it today you would lose (891.00) from holding Smart Digital Group or give up 82.81% of portfolio value over 90 days.

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

Drilling Tools International  vs.  Smart Digital Group

Drilling Tools Inter

Risk-Adjusted Performance

Weakest

Over the last 90 days Drilling Tools International has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in November 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Smart Digital Group

Risk-Adjusted Performance

Weakest

Over the last 90 days Smart Digital Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy fundamental indicators, Smart Digital is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Drilling Tools and Smart Digital

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

The idea behind Drilling Tools International and Smart Digital Group 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.