Correlation Between Geospace Technologies and Archrock

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

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

Diversification Opportunities for Geospace Technologies and Archrock

-0.52

Correlation Coefficient

Geospace Technologies  Archrock

Excellent diversification

The 3 months correlation between Geospace and Archrock is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Geospace Technologies and Archrock in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Archrock 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 Archrock. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Archrock has no effect on the direction of Geospace Technologies i.e., Geospace Technologies and Archrock go up and down completely randomly.

Pair Corralation between Geospace Technologies and Archrock

Given the investment horizon of 90 days Geospace Technologies is expected to under-perform the Archrock. In addition to that, Geospace Technologies is 1.09 times more volatile than Archrock. It trades about -0.13 of its total potential returns per unit of risk. Archrock is currently generating about 0.04 per unit of volatility. If you would invest  2,545  in Archrock on November 28, 2024 and sell it today you would earn a total of  95.00  from holding Archrock or generate 3.73% return on investment over 90 days.

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

Geospace Technologies  vs.  Archrock

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 March 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Archrock

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Archrock are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, Archrock may actually be approaching a critical reversion point that can send shares even higher in March 2025.

Pair Trading with Geospace Technologies and Archrock

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

The idea behind Geospace Technologies and Archrock 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.