Correlation Between Halliburton and Metalfrio Solutions

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

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

Diversification Opportunities for Halliburton and Metalfrio Solutions

0.47

Correlation Coefficient

Halliburton  Metalfrio Solutions

Very weak diversification

The 3 months correlation between Halliburton and Metalfrio is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Halliburton and Metalfrio Solutions SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Metalfrio Solutions 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 Metalfrio Solutions. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Metalfrio Solutions has no effect on the direction of Halliburton i.e., Halliburton and Metalfrio Solutions go up and down completely randomly.

Pair Corralation between Halliburton and Metalfrio Solutions

Assuming the 90 days trading horizon Halliburton is expected to under-perform the Metalfrio Solutions. But the stock apears to be less risky and, when comparing its historical volatility, Halliburton is 1.56 times less risky than Metalfrio Solutions. The stock trades about -0.06 of its potential returns per unit of risk. The Metalfrio Solutions SA is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  33,000  in Metalfrio Solutions SA on December 30, 2024 and sell it today you would lose (3,001) from holding Metalfrio Solutions SA or give up 9.09% of portfolio value over 90 days.

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

Halliburton  vs.  Metalfrio Solutions SA

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 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.

Metalfrio Solutions

Risk-Adjusted Performance

Very Weak

Over the last 90 days Metalfrio Solutions SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Metalfrio Solutions is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Halliburton and Metalfrio Solutions

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

The idea behind Halliburton and Metalfrio Solutions SA 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.

Check out your portfolio center.

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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.