Correlation Between Geospace Technologies and Applied Industrial

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

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

Diversification Opportunities for Geospace Technologies and Applied Industrial

0.51

Correlation Coefficient

Geospace Technologies  Applied Industrial

Very weak diversification

The 3 months correlation between Geospace and Applied is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Geospace Technologies and Applied Industrial Technologie in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Applied Industrial and Geospace Technologies 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 Geospace Technologies are associated (or correlated) with Applied Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Applied Industrial has no effect on the direction of Geospace Technologies i.e., Geospace Technologies and Applied Industrial go up and down completely randomly.

Pair Corralation between Geospace Technologies and Applied Industrial

Given the investment horizon of 90 days Geospace Technologies is expected to under-perform the Applied Industrial. In addition to that, Geospace Technologies is 1.51 times more volatile than Applied Industrial Technologies. It trades about -0.18 of its total potential returns per unit of risk. Applied Industrial Technologies is currently generating about -0.01 per unit of volatility. If you would invest  23,824  in Applied Industrial Technologies on December 29, 2024 and sell it today you would lose (602.00) from holding Applied Industrial Technologies or give up 2.53% of portfolio value over 90 days.

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

Geospace Technologies  vs.  Applied Industrial Technologie

Geospace Technologies

Risk-Adjusted Performance

Very Weak

Over the last 90 days Geospace Technologies 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 comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Applied Industrial

Risk-Adjusted Performance

Very Weak

Over the last 90 days Applied Industrial Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable forward indicators, Applied Industrial is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Geospace Technologies and Applied Industrial

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

The idea behind Geospace Technologies and Applied Industrial Technologies 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.