Correlation Between Halliburton and Grupo KUO

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

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

Diversification Opportunities for Halliburton and Grupo KUO

0.39

Correlation Coefficient

Halliburton  Grupo KUO

Weak diversification

The 3 months correlation between Halliburton and Grupo is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Halliburton and Grupo KUO SAB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grupo KUO SAB and Halliburton 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 Halliburton are associated (or correlated) with Grupo KUO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grupo KUO SAB has no effect on the direction of Halliburton i.e., Halliburton and Grupo KUO go up and down completely randomly.

Pair Corralation between Halliburton and Grupo KUO

Assuming the 90 days trading horizon Halliburton is expected to under-perform the Grupo KUO. In addition to that, Halliburton is 1.53 times more volatile than Grupo KUO SAB. It trades about -0.29 of its total potential returns per unit of risk. Grupo KUO SAB is currently generating about -0.08 per unit of volatility. If you would invest  4,600  in Grupo KUO SAB on September 23, 2024 and sell it today you would lose (200.00) from holding Grupo KUO SAB or give up 4.35% of portfolio value over 90 days.

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

Halliburton  vs.  Grupo KUO SAB

Halliburton

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Halliburton has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's essential indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Grupo KUO SAB

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Grupo KUO SAB are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Grupo KUO is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Halliburton and Grupo KUO

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

The idea behind Halliburton and Grupo KUO SAB 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.