Correlation Between Geospace Technologies and Petrofac
Can any of the company-specific risk be diversified away by investing in both Geospace Technologies and Petrofac 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 Geospace Technologies and Petrofac into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Geospace Technologies and Petrofac Ltd ADR, you can compare the effects of market volatilities on Geospace Technologies and Petrofac 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 Geospace Technologies with a short position of Petrofac. Check out your portfolio center. Please also check ongoing floating volatility patterns of Geospace Technologies and Petrofac.
Diversification Opportunities for Geospace Technologies and Petrofac
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Geospace and Petrofac is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Geospace Technologies and Petrofac Ltd ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Petrofac ADR and Geospace Technologies 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 Geospace Technologies are associated (or correlated) with Petrofac. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Petrofac ADR has no effect on the direction of Geospace Technologies i.e., Geospace Technologies and Petrofac go up and down completely randomly.
Pair Corralation between Geospace Technologies and Petrofac
Given the investment horizon of 90 days Geospace Technologies is expected to generate 0.32 times more return on investment than Petrofac. However, Geospace Technologies is 3.08 times less risky than Petrofac. It trades about 0.0 of its potential returns per unit of risk. Petrofac Ltd ADR is currently generating about -0.03 per unit of risk. If you would invest 992.00 in Geospace Technologies on November 2, 2024 and sell it today you would lose (59.00) from holding Geospace Technologies or give up 5.95% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Geospace Technologies vs. Petrofac Ltd ADR
Performance |
| Timeline |
| Geospace Technologies |
| Petrofac ADR |
Geospace Technologies and Petrofac Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Geospace Technologies and Petrofac
The main advantage of trading using opposite Geospace Technologies and Petrofac positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Geospace Technologies position performs unexpectedly, Petrofac 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 Petrofac will offset losses from the drop in Petrofac's long position.| Geospace Technologies vs. Enerflex | Geospace Technologies vs. Oil States International | Geospace Technologies vs. MRC Global | Geospace Technologies vs. North American Construction |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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