Correlation Between Profire Ene and Geospace Technologies
Can any of the company-specific risk be diversified away by investing in both Profire Ene and Geospace Technologies 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 Profire Ene and Geospace Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Profire Ene and Geospace Technologies, you can compare the effects of market volatilities on Profire Ene and Geospace Technologies 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 Profire Ene with a short position of Geospace Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Profire Ene and Geospace Technologies.
Diversification Opportunities for Profire Ene and Geospace Technologies
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Profire and Geospace is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Profire Ene and Geospace Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Geospace Technologies and Profire Ene 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 Profire Ene are associated (or correlated) with Geospace Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Geospace Technologies has no effect on the direction of Profire Ene i.e., Profire Ene and Geospace Technologies go up and down completely randomly.
Pair Corralation between Profire Ene and Geospace Technologies
Given the investment horizon of 90 days Profire Ene is expected to generate 1.02 times less return on investment than Geospace Technologies. In addition to that, Profire Ene is 1.28 times more volatile than Geospace Technologies. It trades about 0.06 of its total potential returns per unit of risk. Geospace Technologies is currently generating about 0.07 per unit of volatility. If you would invest 425.00 in Geospace Technologies on August 24, 2024 and sell it today you would earn a total of 701.00 from holding Geospace Technologies or generate 164.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Profire Ene vs. Geospace Technologies
Performance |
| Timeline |
| Profire Ene |
| Geospace Technologies |
Profire Ene and Geospace Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Profire Ene and Geospace Technologies
The main advantage of trading using opposite Profire Ene and Geospace Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Profire Ene position performs unexpectedly, Geospace Technologies 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 Geospace Technologies will offset losses from the drop in Geospace Technologies' long position.| Profire Ene vs. Enservco Co | Profire Ene vs. Nine Energy Service | Profire Ene vs. Enerflex | Profire Ene vs. Geospace Technologies |
| Geospace Technologies vs. Enerflex | Geospace Technologies vs. Oil States International | Geospace Technologies vs. Newpark Resources | Geospace Technologies 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 Global Correlations module to find global opportunities by holding instruments from different markets.
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