Correlation Between Superior Drilling and Enerflex

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

By analyzing existing cross correlation between Superior Drilling Products and Enerflex, you can compare the effects of market volatilities on Superior Drilling and Enerflex 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 Superior Drilling with a short position of Enerflex. Check out your portfolio center. Please also check ongoing floating volatility patterns of Superior Drilling and Enerflex.

Diversification Opportunities for Superior Drilling and Enerflex

-0.34

Correlation Coefficient

Superior Drilling  Enerflex

Very good diversification

The 3 months correlation between Superior and Enerflex is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Superior Drilling Products and Enerflex in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enerflex and Superior Drilling 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 Superior Drilling Products are associated (or correlated) with Enerflex. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Enerflex has no effect on the direction of Superior Drilling i.e., Superior Drilling and Enerflex go up and down completely randomly.

Pair Corralation between Superior Drilling and Enerflex

If you would invest  904.00  in Enerflex on September 21, 2024 and sell it today you would earn a total of  37.00  from holding Enerflex or generate 4.09% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Superior Drilling Products  vs.  Enerflex

Superior Drilling

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Superior Drilling Products has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Superior Drilling is not utilizing all of its potentials. The newest stock price confusion, may contribute to short-horizon losses for the traders.

Enerflex

Risk-Adjusted Performance

29 of 100

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Enerflex are ranked lower than 29 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Enerflex unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Superior Drilling and Enerflex

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

The idea behind Superior Drilling Products and Enerflex 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.