Correlation Between Precision Drilling and SM Investments

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

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

Diversification Opportunities for Precision Drilling and SM Investments

-0.55

Correlation Coefficient

Precision Drilling  SM Investments

Excellent diversification

The 3 months correlation between Precision and SVTMF is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Precision Drilling and SM Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SM Investments and Precision 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 Precision Drilling are associated (or correlated) with SM Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SM Investments has no effect on the direction of Precision Drilling i.e., Precision Drilling and SM Investments go up and down completely randomly.

Pair Corralation between Precision Drilling and SM Investments

Considering the 90-day investment horizon Precision Drilling is expected to generate 1.04 times more return on investment than SM Investments. However, Precision Drilling is 1.04 times more volatile than SM Investments. It trades about 0.11 of its potential returns per unit of risk. SM Investments is currently generating about -0.18 per unit of risk. If you would invest  5,358  in Precision Drilling on August 4, 2025 and sell it today you would earn a total of  633.00  from holding Precision Drilling or generate 11.81% return on investment over 90 days.

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

Precision Drilling  vs.  SM Investments

Precision Drilling

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in Precision Drilling are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak fundamental indicators, Precision Drilling may actually be approaching a critical reversion point that can send shares even higher in December 2025.

SM Investments

Risk-Adjusted Performance

Weakest

Over the last 90 days SM Investments has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's primary indicators remain nearly stable which may send shares a bit higher in December 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Precision Drilling and SM Investments

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

The idea behind Precision Drilling and SM Investments 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.

Check out your portfolio center.

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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.