Correlation Between Archrock and Oceaneering International

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

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

Diversification Opportunities for Archrock and Oceaneering International

-0.32

Correlation Coefficient

Archrock  Oceaneering International

Very good diversification

The 3 months correlation between Archrock and Oceaneering is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Archrock and Oceaneering International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oceaneering International and Archrock 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 Archrock are associated (or correlated) with Oceaneering International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oceaneering International has no effect on the direction of Archrock i.e., Archrock and Oceaneering International go up and down completely randomly.

Pair Corralation between Archrock and Oceaneering International

Given the investment horizon of 90 days Archrock is expected to under-perform the Oceaneering International. In addition to that, Archrock is 1.9 times more volatile than Oceaneering International. It trades about -0.11 of its total potential returns per unit of risk. Oceaneering International is currently generating about -0.16 per unit of volatility. If you would invest  2,710  in Oceaneering International on November 19, 2024 and sell it today you would lose (162.00) from holding Oceaneering International or give up 5.98% of portfolio value over 90 days.

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

Archrock  vs.  Oceaneering International

Archrock

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Archrock are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, Archrock exhibited solid returns over the last few months and may actually be approaching a breakup point.

Oceaneering International

Risk-Adjusted Performance

Very Weak

Over the last 90 days Oceaneering International has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's forward indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Pair Trading with Archrock and Oceaneering International

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

The idea behind Archrock and Oceaneering International 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.