Correlation Between Saipem SpA and Geospace Technologies
Can any of the company-specific risk be diversified away by investing in both Saipem SpA 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 Saipem SpA and Geospace Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Saipem SpA and Geospace Technologies, you can compare the effects of market volatilities on Saipem SpA 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 Saipem SpA with a short position of Geospace Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Saipem SpA and Geospace Technologies.
Diversification Opportunities for Saipem SpA and Geospace Technologies
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Saipem and Geospace is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Saipem SpA and Geospace Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Geospace Technologies and Saipem SpA 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 Saipem SpA 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 Saipem SpA i.e., Saipem SpA and Geospace Technologies go up and down completely randomly.
Pair Corralation between Saipem SpA and Geospace Technologies
Assuming the 90 days horizon Saipem SpA is expected to generate 0.84 times more return on investment than Geospace Technologies. However, Saipem SpA is 1.19 times less risky than Geospace Technologies. It trades about 0.04 of its potential returns per unit of risk. Geospace Technologies is currently generating about 0.0 per unit of risk. If you would invest 231.00 in Saipem SpA on November 2, 2024 and sell it today you would earn a total of 16.00 from holding Saipem SpA or generate 6.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Saipem SpA vs. Geospace Technologies
Performance |
| Timeline |
| Saipem SpA |
| Geospace Technologies |
Saipem SpA and Geospace Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Saipem SpA and Geospace Technologies
The main advantage of trading using opposite Saipem SpA and Geospace Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Saipem SpA 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.| Saipem SpA vs. Worley Parsons | Saipem SpA vs. Petrofac Ltd ADR | Saipem SpA vs. SMG Industries | Saipem SpA vs. NXT Energy Solutions |
| 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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