Correlation Between ProFrac Holding and Akastor ASA

Can any of the company-specific risk be diversified away by investing in both ProFrac Holding and Akastor ASA 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 ProFrac Holding and Akastor ASA into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between ProFrac Holding Corp and Akastor ASA, you can compare the effects of market volatilities on ProFrac Holding and Akastor ASA 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 ProFrac Holding with a short position of Akastor ASA. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProFrac Holding and Akastor ASA.

Diversification Opportunities for ProFrac Holding and Akastor ASA

-0.04

Correlation Coefficient

ProFrac Holding  Akastor ASA

Good diversification

The 3 months correlation between ProFrac and Akastor is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding ProFrac Holding Corp and Akastor ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Akastor ASA and ProFrac Holding 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 ProFrac Holding Corp are associated (or correlated) with Akastor ASA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Akastor ASA has no effect on the direction of ProFrac Holding i.e., ProFrac Holding and Akastor ASA go up and down completely randomly.

Pair Corralation between ProFrac Holding and Akastor ASA

Given the investment horizon of 90 days ProFrac Holding Corp is expected to generate 3.99 times more return on investment than Akastor ASA. However, ProFrac Holding is 3.99 times more volatile than Akastor ASA. It trades about 0.02 of its potential returns per unit of risk. Akastor ASA is currently generating about -0.12 per unit of risk. If you would invest  727.00  in ProFrac Holding Corp on September 30, 2024 and sell it today you would earn a total of  6.00  from holding ProFrac Holding Corp or generate 0.83% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

ProFrac Holding Corp  vs.  Akastor ASA

ProFrac Holding Corp

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in ProFrac Holding Corp are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak fundamental indicators, ProFrac Holding exhibited solid returns over the last few months and may actually be approaching a breakup point.

Akastor ASA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Akastor ASA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest inconsistent performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with ProFrac Holding and Akastor ASA

The main advantage of trading using opposite ProFrac Holding and Akastor ASA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ProFrac Holding position performs unexpectedly, Akastor ASA 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 Akastor ASA will offset losses from the drop in Akastor ASA's long position.

The idea behind ProFrac Holding Corp and Akastor ASA pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.