Correlation Between Flotek Industries and Enservco

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

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

Diversification Opportunities for Flotek Industries and Enservco

0.0

Correlation Coefficient

Flotek Industries  Enservco

Pay attention - limited upside

The 3 months correlation between Flotek and Enservco is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Flotek Industries and Enservco Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enservco and Flotek Industries 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 Flotek Industries are associated (or correlated) with Enservco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Enservco has no effect on the direction of Flotek Industries i.e., Flotek Industries and Enservco go up and down completely randomly.

Pair Corralation between Flotek Industries and Enservco

If you would invest (100.00) in Enservco Co on December 30, 2024 and sell it today you would earn a total of  100.00  from holding Enservco Co or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Flotek Industries  vs.  Enservco Co

Flotek Industries

Risk-Adjusted Performance

Very Weak

Over the last 90 days Flotek Industries has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Flotek Industries is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Enservco

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Flotek Industries and Enservco

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

The idea behind Flotek Industries and Enservco Co 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.