Correlation Between Armada Hflr and Schlumberger

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Can any of the company-specific risk be diversified away by investing in both Armada Hflr and Schlumberger 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 Armada Hflr and Schlumberger into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Armada Hflr Pr and Schlumberger Limited, you can compare the effects of market volatilities on Armada Hflr and Schlumberger 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 Armada Hflr with a short position of Schlumberger. Check out your portfolio center. Please also check ongoing floating volatility patterns of Armada Hflr and Schlumberger.

Diversification Opportunities for Armada Hflr and Schlumberger

0.12
  Correlation Coefficient

Average diversification

The 3 months correlation between Armada and Schlumberger is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Armada Hflr Pr and Schlumberger Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Schlumberger Limited and Armada Hflr 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 Armada Hflr Pr are associated (or correlated) with Schlumberger. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Schlumberger Limited has no effect on the direction of Armada Hflr i.e., Armada Hflr and Schlumberger go up and down completely randomly.

Pair Corralation between Armada Hflr and Schlumberger

Considering the 90-day investment horizon Armada Hflr Pr is expected to generate 0.48 times more return on investment than Schlumberger. However, Armada Hflr Pr is 2.1 times less risky than Schlumberger. It trades about -0.15 of its potential returns per unit of risk. Schlumberger Limited is currently generating about -0.11 per unit of risk. If you would invest  1,106  in Armada Hflr Pr on September 23, 2024 and sell it today you would lose (81.00) from holding Armada Hflr Pr or give up 7.32% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy97.67%
ValuesDaily Returns

Armada Hflr Pr  vs.  Schlumberger Limited

 Performance 
       Timeline  
Armada Hflr Pr 

Risk-Adjusted Performance

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Strong
Very Weak
Over the last 90 days Armada Hflr Pr has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's technical indicators remain fairly strong which may send shares a bit higher in January 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.
Schlumberger Limited 

Risk-Adjusted Performance

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Weak
 
Strong
Very Weak
Over the last 90 days Schlumberger Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Armada Hflr and Schlumberger Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Armada Hflr and Schlumberger

The main advantage of trading using opposite Armada Hflr and Schlumberger positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Armada Hflr position performs unexpectedly, Schlumberger 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 Schlumberger will offset losses from the drop in Schlumberger's long position.
The idea behind Armada Hflr Pr and Schlumberger Limited 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.
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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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.

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