Correlation Between Vantage Drilling and Precision Drilling

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

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

Diversification Opportunities for Vantage Drilling and Precision Drilling

-0.28

Correlation Coefficient

Vantage Drilling  Precision Drilling

Very good diversification

The 3 months correlation between Vantage and Precision is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Vantage Drilling International and Precision Drilling in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Precision Drilling and Vantage 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 Vantage Drilling International are associated (or correlated) with Precision Drilling. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Precision Drilling has no effect on the direction of Vantage Drilling i.e., Vantage Drilling and Precision Drilling go up and down completely randomly.

Pair Corralation between Vantage Drilling and Precision Drilling

Assuming the 90 days horizon Vantage Drilling International is expected to under-perform the Precision Drilling. But the pink sheet apears to be less risky and, when comparing its historical volatility, Vantage Drilling International is 44.32 times less risky than Precision Drilling. The pink sheet trades about -0.13 of its potential returns per unit of risk. The Precision Drilling is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  4,546  in Precision Drilling on May 13, 2025 and sell it today you would earn a total of  944.00  from holding Precision Drilling or generate 20.77% return on investment over 90 days.

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

Vantage Drilling International  vs.  Precision Drilling

Vantage Drilling Int

Risk-Adjusted Performance

Weakest

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

Precision Drilling

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Precision Drilling are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating fundamental indicators, Precision Drilling unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Vantage Drilling and Precision Drilling

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

The idea behind Vantage Drilling International and Precision Drilling 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..