Correlation Between Oil Equipment and Access Flex

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

By analyzing existing cross correlation between Oil Equipment Services and Access Flex Bear, you can compare the effects of market volatilities on Oil Equipment and Access Flex 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 Oil Equipment with a short position of Access Flex. Check out your portfolio center. Please also check ongoing floating volatility patterns of Oil Equipment and Access Flex.

Diversification Opportunities for Oil Equipment and Access Flex

-0.53

Correlation Coefficient

Oil Equipment  Access Flex

Excellent diversification

The 3 months correlation between Oil and Access is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Oil Equipment Services and Access Flex Bear in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Access Flex Bear and Oil Equipment 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 Oil Equipment Services are associated (or correlated) with Access Flex. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Access Flex Bear has no effect on the direction of Oil Equipment i.e., Oil Equipment and Access Flex go up and down completely randomly.

Pair Corralation between Oil Equipment and Access Flex

Assuming the 90 days horizon Oil Equipment Services is expected to generate 7.26 times more return on investment than Access Flex. However, Oil Equipment is 7.26 times more volatile than Access Flex Bear. It trades about 0.0 of its potential returns per unit of risk. Access Flex Bear is currently generating about -0.04 per unit of risk. If you would invest  8,736  in Oil Equipment Services on September 24, 2024 and sell it today you would lose (1,796) from holding Oil Equipment Services or give up 20.56% of portfolio value over 90 days.

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

Oil Equipment Services  vs.  Access Flex Bear

Oil Equipment Services

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Oil Equipment Services has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Access Flex Bear

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Access Flex Bear are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Access Flex is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Oil Equipment and Access Flex

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

The idea behind Oil Equipment Services and Access Flex Bear 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.