Correlation Between Compania and Halliburton
Can any of the company-specific risk be diversified away by investing in both Compania and Halliburton 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 Compania and Halliburton into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Compania de Transporte and Halliburton Co, you can compare the effects of market volatilities on Compania and Halliburton 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 Compania with a short position of Halliburton. Check out your portfolio center. Please also check ongoing floating volatility patterns of Compania and Halliburton.
Diversification Opportunities for Compania and Halliburton
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Compania and Halliburton is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Compania de Transporte and Halliburton Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Halliburton and Compania 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 Compania de Transporte are associated (or correlated) with Halliburton. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Halliburton has no effect on the direction of Compania i.e., Compania and Halliburton go up and down completely randomly.
Pair Corralation between Compania and Halliburton
Assuming the 90 days trading horizon Compania de Transporte is expected to under-perform the Halliburton. In addition to that, Compania is 2.09 times more volatile than Halliburton Co. It trades about -0.25 of its total potential returns per unit of risk. Halliburton Co is currently generating about 0.6 per unit of volatility. If you would invest 1,482,500 in Halliburton Co on October 20, 2024 and sell it today you would earn a total of 297,500 from holding Halliburton Co or generate 20.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
Compania de Transporte vs. Halliburton Co
Performance |
| Timeline |
| Compania de Transporte |
| Halliburton |
Compania and Halliburton Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Compania and Halliburton
The main advantage of trading using opposite Compania and Halliburton positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Compania position performs unexpectedly, Halliburton 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 Halliburton will offset losses from the drop in Halliburton's long position.| Compania vs. Pampa Energia SA | Compania vs. American Express Co | Compania vs. Transportadora de Gas | Compania vs. Central Puerto SA |
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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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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