Correlation Between Safe Pro and Patterson UTI

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

By analyzing existing cross correlation between Safe Pro Group and Patterson UTI Energy, you can compare the effects of market volatilities on Safe Pro and Patterson UTI 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 Safe Pro with a short position of Patterson UTI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Safe Pro and Patterson UTI.

Diversification Opportunities for Safe Pro and Patterson UTI

-0.06

Correlation Coefficient

Safe Pro  Patterson UTI

Good diversification

The 3 months correlation between Safe and Patterson is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Safe Pro Group and Patterson UTI Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Patterson UTI Energy and Safe Pro 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 Safe Pro Group are associated (or correlated) with Patterson UTI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Patterson UTI Energy has no effect on the direction of Safe Pro i.e., Safe Pro and Patterson UTI go up and down completely randomly.

Pair Corralation between Safe Pro and Patterson UTI

Given the investment horizon of 90 days Safe Pro is expected to generate 1.22 times less return on investment than Patterson UTI. In addition to that, Safe Pro is 3.83 times more volatile than Patterson UTI Energy. It trades about 0.02 of its total potential returns per unit of risk. Patterson UTI Energy is currently generating about 0.07 per unit of volatility. If you would invest  761.00  in Patterson UTI Energy on December 20, 2024 and sell it today you would earn a total of  82.00  from holding Patterson UTI Energy or generate 10.78% return on investment over 90 days.

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

Safe Pro Group  vs.  Patterson UTI Energy

Safe Pro Group

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Safe Pro Group are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak basic indicators, Safe Pro may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Patterson UTI Energy

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Patterson UTI Energy are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very weak technical and fundamental indicators, Patterson UTI displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Safe Pro and Patterson UTI

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

The idea behind Safe Pro Group and Patterson UTI Energy 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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.