Correlation Between Petrofac and Subsea 7
Can any of the company-specific risk be diversified away by investing in both Petrofac and Subsea 7 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 Subsea 7 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 Subsea 7 SA, you can compare the effects of market volatilities on Petrofac and Subsea 7 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 Subsea 7. Check out your portfolio center. Please also check ongoing floating volatility patterns of Petrofac and Subsea 7.
Diversification Opportunities for Petrofac and Subsea 7
Very good diversification
The 3 months correlation between Petrofac and Subsea is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Petrofac Ltd ADR and Subsea 7 SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Subsea 7 SA 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 Subsea 7. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Subsea 7 SA has no effect on the direction of Petrofac i.e., Petrofac and Subsea 7 go up and down completely randomly.
Pair Corralation between Petrofac and Subsea 7
Assuming the 90 days horizon Petrofac Ltd ADR is expected to generate 18.38 times more return on investment than Subsea 7. However, Petrofac is 18.38 times more volatile than Subsea 7 SA. It trades about 0.03 of its potential returns per unit of risk. Subsea 7 SA is currently generating about 0.1 per unit of risk. If you would invest 50.00 in Petrofac Ltd ADR on August 27, 2024 and sell it today you would lose (44.00) from holding Petrofac Ltd ADR or give up 88.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 9.07% |
| Values | Daily Returns |
Petrofac Ltd ADR vs. Subsea 7 SA
Performance |
| Timeline |
| Petrofac ADR |
| Subsea 7 SA |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Petrofac and Subsea 7 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Petrofac and Subsea 7
The main advantage of trading using opposite Petrofac and Subsea 7 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Petrofac position performs unexpectedly, Subsea 7 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 Subsea 7 will offset losses from the drop in Subsea 7's long position.| Petrofac vs. Expro Group Holdings | Petrofac vs. ChampionX | Petrofac vs. Ranger Energy Services | Petrofac vs. Cactus Inc |
| Subsea 7 vs. Bri Chem Corp | Subsea 7 vs. Pulse Seismic | Subsea 7 vs. Worley Parsons | Subsea 7 vs. Petrofac Ltd ADR |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
Other Complementary Tools
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges | |
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
| Stocks Directory Find actively traded stocks across global markets | |
| Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets | |
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon |