Correlation Between Saipem SpA and Petrofac
Can any of the company-specific risk be diversified away by investing in both Saipem SpA and Petrofac 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 Petrofac into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Saipem SpA and Petrofac Ltd ADR, you can compare the effects of market volatilities on Saipem SpA and Petrofac 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 Petrofac. Check out your portfolio center. Please also check ongoing floating volatility patterns of Saipem SpA and Petrofac.
Diversification Opportunities for Saipem SpA and Petrofac
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Saipem and Petrofac is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Saipem SpA and Petrofac Ltd ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Petrofac ADR 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 Petrofac. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Petrofac ADR has no effect on the direction of Saipem SpA i.e., Saipem SpA and Petrofac go up and down completely randomly.
Pair Corralation between Saipem SpA and Petrofac
Assuming the 90 days horizon Saipem SpA is expected to generate 0.27 times more return on investment than Petrofac. However, Saipem SpA is 3.75 times less risky than Petrofac. It trades about 0.23 of its potential returns per unit of risk. Petrofac Ltd ADR is currently generating about -0.06 per unit of risk. If you would invest 223.00 in Saipem SpA on August 27, 2024 and sell it today you would earn a total of 22.00 from holding Saipem SpA or generate 9.87% 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. Petrofac Ltd ADR
Performance |
| Timeline |
| Saipem SpA |
| Petrofac ADR |
Saipem SpA and Petrofac Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Saipem SpA and Petrofac
The main advantage of trading using opposite Saipem SpA and Petrofac positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Saipem SpA position performs unexpectedly, Petrofac 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 Petrofac will offset losses from the drop in Petrofac's long position.| Saipem SpA vs. Expro Group Holdings | Saipem SpA vs. ChampionX | Saipem SpA vs. Ranger Energy Services | Saipem SpA vs. Cactus Inc |
| Petrofac vs. Expro Group Holdings | Petrofac vs. ChampionX | Petrofac vs. Ranger Energy Services | Petrofac 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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