Correlation Between Auri and Flotek Industries
Can any of the company-specific risk be diversified away by investing in both Auri and Flotek Industries 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 Auri and Flotek Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Auri Inc and Flotek Industries, you can compare the effects of market volatilities on Auri and Flotek Industries 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 Auri with a short position of Flotek Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Auri and Flotek Industries.
Diversification Opportunities for Auri and Flotek Industries
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Auri and Flotek is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Auri Inc and Flotek Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Flotek Industries and Auri 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 Auri Inc are associated (or correlated) with Flotek Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Flotek Industries has no effect on the direction of Auri i.e., Auri and Flotek Industries go up and down completely randomly.
Pair Corralation between Auri and Flotek Industries
Given the investment horizon of 90 days Auri Inc is expected to generate 8.52 times more return on investment than Flotek Industries. However, Auri is 8.52 times more volatile than Flotek Industries. It trades about 0.14 of its potential returns per unit of risk. Flotek Industries is currently generating about 0.12 per unit of risk. If you would invest 0.03 in Auri Inc on September 2, 2024 and sell it today you would lose (0.01) from holding Auri Inc or give up 33.33% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.6% |
| Values | Daily Returns |
Auri Inc vs. Flotek Industries
Performance |
| Timeline |
| Auri Inc |
| Flotek Industries |
Auri and Flotek Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Auri and Flotek Industries
The main advantage of trading using opposite Auri and Flotek Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Auri position performs unexpectedly, Flotek Industries 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 Flotek Industries will offset losses from the drop in Flotek Industries' long position.The idea behind Auri Inc and Flotek Industries 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.| Flotek Industries vs. ProPetro Holding Corp | Flotek Industries vs. Liberty Oilfield Services | Flotek Industries vs. KLX Energy Services | Flotek Industries vs. MRC Global |
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 Stocks Directory module to find actively traded stocks across global markets.
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