Correlation Between Petrofac and Calfrac Well
Can any of the company-specific risk be diversified away by investing in both Petrofac and Calfrac Well 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 Petrofac and Calfrac Well into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Petrofac Ltd ADR and Calfrac Well Services, you can compare the effects of market volatilities on Petrofac and Calfrac Well 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 Petrofac with a short position of Calfrac Well. Check out your portfolio center. Please also check ongoing floating volatility patterns of Petrofac and Calfrac Well.
Diversification Opportunities for Petrofac and Calfrac Well
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Petrofac and Calfrac is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Petrofac Ltd ADR and Calfrac Well Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Calfrac Well Services and Petrofac 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 Petrofac Ltd ADR are associated (or correlated) with Calfrac Well. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Calfrac Well Services has no effect on the direction of Petrofac i.e., Petrofac and Calfrac Well go up and down completely randomly.
Pair Corralation between Petrofac and Calfrac Well
Assuming the 90 days horizon Petrofac Ltd ADR is expected to under-perform the Calfrac Well. In addition to that, Petrofac is 3.5 times more volatile than Calfrac Well Services. It trades about -0.06 of its total potential returns per unit of risk. Calfrac Well Services is currently generating about 0.15 per unit of volatility. If you would invest 267.00 in Calfrac Well Services on August 27, 2024 and sell it today you would earn a total of 17.00 from holding Calfrac Well Services or generate 6.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Petrofac Ltd ADR vs. Calfrac Well Services
Performance |
| Timeline |
| Petrofac ADR |
| Calfrac Well Services |
Petrofac and Calfrac Well Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Petrofac and Calfrac Well
The main advantage of trading using opposite Petrofac and Calfrac Well positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Petrofac position performs unexpectedly, Calfrac Well 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 Calfrac Well will offset losses from the drop in Calfrac Well's long position.| Petrofac vs. Expro Group Holdings | Petrofac vs. ChampionX | Petrofac vs. Ranger Energy Services | Petrofac vs. Cactus Inc |
| Calfrac Well vs. Greenway Technologies | Calfrac Well vs. Akastor ASA | Calfrac Well vs. Auri Inc | Calfrac Well vs. Us Energy Initiative |
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 CEOs Directory module to screen CEOs from public companies around the world.
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