Correlation Between Halliburton and Oceaneering International

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

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

Diversification Opportunities for Halliburton and Oceaneering International

0.85

Correlation Coefficient

Halliburton  Oceaneering International

Very poor diversification

The 3 months correlation between Halliburton and Oceaneering is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Halliburton and Oceaneering International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oceaneering International 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 Oceaneering International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oceaneering International has no effect on the direction of Halliburton i.e., Halliburton and Oceaneering International go up and down completely randomly.

Pair Corralation between Halliburton and Oceaneering International

Considering the 90-day investment horizon Halliburton is expected to generate 0.84 times more return on investment than Oceaneering International. However, Halliburton is 1.2 times less risky than Oceaneering International. It trades about -0.15 of its potential returns per unit of risk. Oceaneering International is currently generating about -0.22 per unit of risk. If you would invest  3,186  in Halliburton on November 28, 2024 and sell it today you would lose (512.00) from holding Halliburton or give up 16.07% of portfolio value over 90 days.

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

Halliburton  vs.  Oceaneering International

Halliburton

Risk-Adjusted Performance

Very Weak

Over the last 90 days Halliburton has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in March 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Oceaneering International

Risk-Adjusted Performance

Very Weak

Over the last 90 days Oceaneering International has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's forward indicators remain fairly strong which may send shares a bit higher in March 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with Halliburton and Oceaneering International

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

The idea behind Halliburton and Oceaneering International 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.