Correlation Between Petrofac and Expro Group

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

By analyzing existing cross correlation between Petrofac Ltd ADR and Expro Group Holdings, you can compare the effects of market volatilities on Petrofac and Expro Group 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 Petrofac with a short position of Expro Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Petrofac and Expro Group.

Diversification Opportunities for Petrofac and Expro Group

0.43

Correlation Coefficient

Petrofac  Expro Group

Very weak diversification

The 3 months correlation between Petrofac and Expro is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Petrofac Ltd ADR and Expro Group Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Expro Group Holdings and Petrofac 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 Petrofac Ltd ADR are associated (or correlated) with Expro Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Expro Group Holdings has no effect on the direction of Petrofac i.e., Petrofac and Expro Group go up and down completely randomly.

Pair Corralation between Petrofac and Expro Group

Assuming the 90 days horizon Petrofac Ltd ADR is expected to generate 3.28 times more return on investment than Expro Group. However, Petrofac is 3.28 times more volatile than Expro Group Holdings. It trades about 0.0 of its potential returns per unit of risk. Expro Group Holdings is currently generating about -0.03 per unit of risk. If you would invest  6.00  in Petrofac Ltd ADR on October 6, 2024 and sell it today you would lose (0.50) from holding Petrofac Ltd ADR or give up 8.33% of portfolio value over 90 days.

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

Petrofac Ltd ADR  vs.  Expro Group Holdings

Petrofac ADR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Petrofac Ltd ADR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong fundamental indicators, Petrofac is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Expro Group Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Expro Group Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Petrofac and Expro Group

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

The idea behind Petrofac Ltd ADR and Expro Group Holdings 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.