Correlation Between Oceaneering International and Archrock

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

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

Diversification Opportunities for Oceaneering International and Archrock

0.89

Correlation Coefficient

Oceaneering International  Archrock

Very poor diversification

The 3 months correlation between Oceaneering and Archrock is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Oceaneering International and Archrock in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Archrock and Oceaneering International 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 Oceaneering International are associated (or correlated) with Archrock. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Archrock has no effect on the direction of Oceaneering International i.e., Oceaneering International and Archrock go up and down completely randomly.

Pair Corralation between Oceaneering International and Archrock

Considering the 90-day investment horizon Oceaneering International is expected to generate 1.57 times less return on investment than Archrock. In addition to that, Oceaneering International is 1.24 times more volatile than Archrock. It trades about 0.11 of its total potential returns per unit of risk. Archrock is currently generating about 0.22 per unit of volatility. If you would invest  1,889  in Archrock on September 2, 2024 and sell it today you would earn a total of  673.00  from holding Archrock or generate 35.63% return on investment over 90 days.

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

Oceaneering International  vs.  Archrock

Oceaneering International

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Oceaneering International are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak forward indicators, Oceaneering International demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Archrock

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Archrock are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain basic indicators, Archrock exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Oceaneering International and Archrock

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

The idea behind Oceaneering International and Archrock 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.