Correlation Between ProFrac Holding and Geospace Technologies

Can any of the company-specific risk be diversified away by investing in both ProFrac Holding 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 ProFrac Holding and Geospace Technologies 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 Geospace Technologies, you can compare the effects of market volatilities on ProFrac Holding 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 ProFrac Holding with a short position of Geospace Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProFrac Holding and Geospace Technologies.

Diversification Opportunities for ProFrac Holding and Geospace Technologies

0.49

Correlation Coefficient

ProFrac Holding  Geospace Technologies

Very weak diversification

The 3 months correlation between ProFrac and Geospace is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding ProFrac Holding Corp and Geospace Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Geospace Technologies 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 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 ProFrac Holding i.e., ProFrac Holding and Geospace Technologies go up and down completely randomly.

Pair Corralation between ProFrac Holding and Geospace Technologies

Given the investment horizon of 90 days ProFrac Holding Corp is expected to generate 1.4 times more return on investment than Geospace Technologies. However, ProFrac Holding is 1.4 times more volatile than Geospace Technologies. It trades about 0.01 of its potential returns per unit of risk. Geospace Technologies is currently generating about -0.18 per unit of risk. If you would invest  786.00  in ProFrac Holding Corp on December 29, 2024 and sell it today you would lose (15.00) from holding ProFrac Holding Corp or give up 1.91% of portfolio value over 90 days.

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

ProFrac Holding Corp  vs.  Geospace Technologies

ProFrac Holding Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days ProFrac Holding Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental indicators, ProFrac Holding is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Geospace Technologies

Risk-Adjusted Performance

Very Weak

Over the last 90 days Geospace Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with ProFrac Holding and Geospace Technologies

The main advantage of trading using opposite ProFrac Holding and Geospace Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ProFrac Holding 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.

The idea behind ProFrac Holding Corp and Geospace Technologies 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.