Correlation Between Geospace Technologies and Saipem SpA
Can any of the company-specific risk be diversified away by investing in both Geospace Technologies and Saipem SpA 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 Saipem SpA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Geospace Technologies and Saipem SpA, you can compare the effects of market volatilities on Geospace Technologies and Saipem SpA 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 Saipem SpA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Geospace Technologies and Saipem SpA.
Diversification Opportunities for Geospace Technologies and Saipem SpA
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Geospace and Saipem is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Geospace Technologies and Saipem SpA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Saipem SpA 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 Saipem SpA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Saipem SpA has no effect on the direction of Geospace Technologies i.e., Geospace Technologies and Saipem SpA go up and down completely randomly.
Pair Corralation between Geospace Technologies and Saipem SpA
Given the investment horizon of 90 days Geospace Technologies is expected to under-perform the Saipem SpA. In addition to that, Geospace Technologies is 2.6 times more volatile than Saipem SpA. It trades about -0.05 of its total potential returns per unit of risk. Saipem SpA is currently generating about 0.3 per unit of volatility. If you would invest 223.00 in Saipem SpA on August 31, 2024 and sell it today you would earn a total of 33.00 from holding Saipem SpA or generate 14.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Geospace Technologies vs. Saipem SpA
Performance |
| Timeline |
| Geospace Technologies |
| Saipem SpA |
Geospace Technologies and Saipem SpA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Geospace Technologies and Saipem SpA
The main advantage of trading using opposite Geospace Technologies and Saipem SpA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Geospace Technologies position performs unexpectedly, Saipem SpA 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 Saipem SpA will offset losses from the drop in Saipem SpA's long position.| Geospace Technologies vs. Enerflex | Geospace Technologies vs. Oil States International | Geospace Technologies vs. Newpark Resources | Geospace Technologies vs. MRC Global |
| Saipem SpA vs. Expro Group Holdings | Saipem SpA vs. ChampionX | Saipem SpA vs. Ranger Energy Services | Saipem SpA vs. Cactus Inc |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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