Correlation Between CSI Compressco and KLX Energy

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

Diversification Opportunities for CSI Compressco and KLX Energy

0.6
  Correlation Coefficient

Poor diversification

The 3 months correlation between CSI and KLX is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding CSI Compressco LP and KLX Energy Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KLX Energy Services and CSI Compressco 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 CSI Compressco LP are associated (or correlated) with KLX Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KLX Energy Services has no effect on the direction of CSI Compressco i.e., CSI Compressco and KLX Energy go up and down completely randomly.

Pair Corralation between CSI Compressco and KLX Energy

If you would invest  111.00  in CSI Compressco LP on September 19, 2024 and sell it today you would earn a total of  0.00  from holding CSI Compressco LP or generate 0.0% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy0.34%
ValuesDaily Returns

CSI Compressco LP  vs.  KLX Energy Services

 Performance 
       Timeline  
CSI Compressco LP 

Risk-Adjusted Performance

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Weak
 
Strong
Very Weak
Over the last 90 days CSI Compressco LP has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable essential indicators, CSI Compressco is not utilizing all of its potentials. The newest stock price agitation, may contribute to short-term losses for the retail investors.
KLX Energy Services 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days KLX Energy Services has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

CSI Compressco and KLX Energy Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with CSI Compressco and KLX Energy

The main advantage of trading using opposite CSI Compressco and KLX Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CSI Compressco position performs unexpectedly, KLX Energy 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 KLX Energy will offset losses from the drop in KLX Energy's long position.
The idea behind CSI Compressco LP and KLX Energy Services 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.

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