Correlation Between Worley Parsons and CGG SA

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

By analyzing existing cross correlation between Worley Parsons and CGG SA ADR, you can compare the effects of market volatilities on Worley Parsons and CGG SA 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 Worley Parsons with a short position of CGG SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Worley Parsons and CGG SA.

Diversification Opportunities for Worley Parsons and CGG SA

0.14

Correlation Coefficient

Worley Parsons  CGG SA

Average diversification

The 3 months correlation between Worley and CGG is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Worley Parsons and CGG SA ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CGG SA ADR and Worley Parsons 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 Worley Parsons are associated (or correlated) with CGG SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CGG SA ADR has no effect on the direction of Worley Parsons i.e., Worley Parsons and CGG SA go up and down completely randomly.

Pair Corralation between Worley Parsons and CGG SA

If you would invest  89.00  in CGG SA ADR on September 29, 2024 and sell it today you would earn a total of  0.00  from holding CGG SA ADR or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	0.79%
Values	Daily Returns

Worley Parsons  vs.  CGG SA ADR

Worley Parsons

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Worley Parsons has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock'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 company investors.

CGG SA ADR

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Worley Parsons and CGG SA

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

The idea behind Worley Parsons and CGG SA ADR 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.