Correlation Between Kodiak Gas and RPC

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

By analyzing existing cross correlation between Kodiak Gas Services, and RPC Inc, you can compare the effects of market volatilities on Kodiak Gas and RPC 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 Kodiak Gas with a short position of RPC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kodiak Gas and RPC.

Diversification Opportunities for Kodiak Gas and RPC

-0.27

Correlation Coefficient

Kodiak Gas  RPC

Very good diversification

The 3 months correlation between Kodiak and RPC is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Kodiak Gas Services, and RPC Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RPC Inc and Kodiak Gas 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 Kodiak Gas Services, are associated (or correlated) with RPC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RPC Inc has no effect on the direction of Kodiak Gas i.e., Kodiak Gas and RPC go up and down completely randomly.

Pair Corralation between Kodiak Gas and RPC

Considering the 90-day investment horizon Kodiak Gas Services, is expected to under-perform the RPC. In addition to that, Kodiak Gas is 1.45 times more volatile than RPC Inc. It trades about -0.06 of its total potential returns per unit of risk. RPC Inc is currently generating about 0.03 per unit of volatility. If you would invest  630.00  in RPC Inc on October 12, 2024 and sell it today you would earn a total of  5.00  from holding RPC Inc or generate 0.79% return on investment over 90 days.

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

Kodiak Gas Services,  vs.  RPC Inc

Kodiak Gas Services,

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Kodiak Gas Services, are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak technical and fundamental indicators, Kodiak Gas unveiled solid returns over the last few months and may actually be approaching a breakup point.

RPC Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days RPC Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest conflicting performance, the Stock's technical and fundamental indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Kodiak Gas and RPC

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

The idea behind Kodiak Gas Services, and RPC Inc 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.