Correlation Between Geospace Technologies and KLX Energy

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

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

Diversification Opportunities for Geospace Technologies and KLX Energy

0.21

Correlation Coefficient

Geospace Technologies  KLX Energy

Modest diversification

The 3 months correlation between Geospace and KLX is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Geospace Technologies and KLX Energy Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KLX Energy Services 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 KLX Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KLX Energy Services has no effect on the direction of Geospace Technologies i.e., Geospace Technologies and KLX Energy go up and down completely randomly.

Pair Corralation between Geospace Technologies and KLX Energy

Given the investment horizon of 90 days Geospace Technologies is expected to generate 0.81 times more return on investment than KLX Energy. However, Geospace Technologies is 1.24 times less risky than KLX Energy. It trades about 0.07 of its potential returns per unit of risk. KLX Energy Services is currently generating about -0.04 per unit of risk. If you would invest  410.00  in Geospace Technologies on September 19, 2024 and sell it today you would earn a total of  560.00  from holding Geospace Technologies or generate 136.59% return on investment over 90 days.

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

Geospace Technologies  vs.  KLX Energy Services

Geospace Technologies

Risk-Adjusted Performance

0 of 100

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 comparatively stable basic indicators, Geospace Technologies is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

KLX Energy Services

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days KLX Energy Services has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Geospace Technologies and KLX Energy

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

The idea behind Geospace Technologies and KLX Energy Services 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..