Correlation Between Major Drilling and Emerita Resources

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

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

Diversification Opportunities for Major Drilling and Emerita Resources

0.63

Correlation Coefficient

Major Drilling  Emerita Resources

Poor diversification

The 3 months correlation between Major and Emerita is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Major Drilling Group and Emerita Resources Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emerita Resources Corp and Major 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 Major Drilling Group are associated (or correlated) with Emerita Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Emerita Resources Corp has no effect on the direction of Major Drilling i.e., Major Drilling and Emerita Resources go up and down completely randomly.

Pair Corralation between Major Drilling and Emerita Resources

Assuming the 90 days horizon Major Drilling Group is expected to generate 0.57 times more return on investment than Emerita Resources. However, Major Drilling Group is 1.75 times less risky than Emerita Resources. It trades about 0.05 of its potential returns per unit of risk. Emerita Resources Corp is currently generating about -0.01 per unit of risk. If you would invest  601.00  in Major Drilling Group on May 6, 2025 and sell it today you would earn a total of  33.00  from holding Major Drilling Group or generate 5.49% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.41%
Values	Daily Returns

Major Drilling Group  vs.  Emerita Resources Corp

Major Drilling Group

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Major Drilling Group are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile essential indicators, Major Drilling may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Emerita Resources Corp

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Major Drilling and Emerita Resources

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

The idea behind Major Drilling Group and Emerita Resources 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.