Correlation Between Ranger Energy and Geospace Technologies

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

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

Diversification Opportunities for Ranger Energy and Geospace Technologies

0.47

Correlation Coefficient

Ranger Energy  Geospace Technologies

Very weak diversification

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

Pair Corralation between Ranger Energy and Geospace Technologies

Given the investment horizon of 90 days Ranger Energy Services is expected to generate 0.79 times more return on investment than Geospace Technologies. However, Ranger Energy Services is 1.27 times less risky than Geospace Technologies. It trades about 0.0 of its potential returns per unit of risk. Geospace Technologies is currently generating about -0.18 per unit of risk. If you would invest  1,517  in Ranger Energy Services on December 29, 2024 and sell it today you would lose (28.00) from holding Ranger Energy Services or give up 1.85% of portfolio value over 90 days.

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

Ranger Energy Services  vs.  Geospace Technologies

Ranger Energy Services

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ranger Energy Services has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable technical and fundamental indicators, Ranger Energy is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Geospace Technologies

Risk-Adjusted Performance

Very Weak

Over the last 90 days Geospace Technologies 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 comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Ranger Energy and Geospace Technologies

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

The idea behind Ranger Energy Services and Geospace Technologies 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.