Correlation Between CGG SA and Petrofac

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

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

Diversification Opportunities for CGG SA and Petrofac

0.35

Correlation Coefficient

CGG SA  Petrofac

Weak diversification

The 3 months correlation between CGG and Petrofac is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding CGG SA ADR and Petrofac Ltd ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Petrofac ADR and CGG SA 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 CGG SA ADR are associated (or correlated) with Petrofac. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Petrofac ADR has no effect on the direction of CGG SA i.e., CGG SA and Petrofac go up and down completely randomly.

Pair Corralation between CGG SA and Petrofac

If you would invest  8.00  in Petrofac Ltd ADR on September 29, 2024 and sell it today you would lose (1.97) from holding Petrofac Ltd ADR or give up 24.62% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	0.79%
Values	Daily Returns

CGG SA ADR  vs.  Petrofac Ltd ADR

CGG SA ADR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CGG SA ADR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, CGG SA is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Petrofac ADR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Petrofac Ltd ADR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's fundamental indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with CGG SA and Petrofac

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

The idea behind CGG SA ADR and Petrofac Ltd ADR 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.