Correlation Between Dril Quip and Expro Group

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

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

Diversification Opportunities for Dril Quip and Expro Group

0.83

Correlation Coefficient

Dril Quip  Expro Group

Very poor diversification

The 3 months correlation between Dril and Expro is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Dril Quip and Expro Group Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Expro Group Holdings and Dril Quip 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 Dril Quip are associated (or correlated) with Expro Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Expro Group Holdings has no effect on the direction of Dril Quip i.e., Dril Quip and Expro Group go up and down completely randomly.

Pair Corralation between Dril Quip and Expro Group

Considering the 90-day investment horizon Dril Quip is expected to under-perform the Expro Group. But the stock apears to be less risky and, when comparing its historical volatility, Dril Quip is 1.06 times less risky than Expro Group. The stock trades about -0.01 of its potential returns per unit of risk. The Expro Group Holdings is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  1,526  in Expro Group Holdings on September 2, 2024 and sell it today you would lose (137.00) from holding Expro Group Holdings or give up 8.98% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	88.31%
Values	Daily Returns

Dril Quip  vs.  Expro Group Holdings

Dril Quip

Risk-Adjusted Performance

0 of 100

OK

Over the last 90 days Dril Quip has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively unsteady basic indicators, Dril Quip reported solid returns over the last few months and may actually be approaching a breakup point.

Expro Group Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Expro Group Holdings 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 very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Dril Quip and Expro Group

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

The idea behind Dril Quip and Expro Group Holdings 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.