Correlation Between Geospace Technologies and Baker Hughes

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

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

Diversification Opportunities for Geospace Technologies and Baker Hughes

-0.11

Correlation Coefficient

Geospace Technologies  Baker Hughes

Good diversification

The 3 months correlation between Geospace and Baker is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Geospace Technologies and Baker Hughes Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baker Hughes 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 Baker Hughes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Baker Hughes has no effect on the direction of Geospace Technologies i.e., Geospace Technologies and Baker Hughes go up and down completely randomly.

Pair Corralation between Geospace Technologies and Baker Hughes

Given the investment horizon of 90 days Geospace Technologies is expected to under-perform the Baker Hughes. In addition to that, Geospace Technologies is 1.55 times more volatile than Baker Hughes Co. It trades about -0.18 of its total potential returns per unit of risk. Baker Hughes Co is currently generating about 0.07 per unit of volatility. If you would invest  4,074  in Baker Hughes Co on December 29, 2024 and sell it today you would earn a total of  289.00  from holding Baker Hughes Co or generate 7.09% return on investment over 90 days.

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

Geospace Technologies  vs.  Baker Hughes Co

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.

Baker Hughes

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Baker Hughes Co are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak forward-looking signals, Baker Hughes may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Geospace Technologies and Baker Hughes

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

The idea behind Geospace Technologies and Baker Hughes 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.