Correlation Between Cactus and Oceaneering International

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

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

Diversification Opportunities for Cactus and Oceaneering International

0.93

Correlation Coefficient

Cactus  Oceaneering International

Almost no diversification

The 3 months correlation between Cactus and Oceaneering is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Cactus Inc and Oceaneering International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oceaneering International and Cactus 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 Cactus Inc are associated (or correlated) with Oceaneering International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oceaneering International has no effect on the direction of Cactus i.e., Cactus and Oceaneering International go up and down completely randomly.

Pair Corralation between Cactus and Oceaneering International

Considering the 90-day investment horizon Cactus Inc is expected to generate 0.9 times more return on investment than Oceaneering International. However, Cactus Inc is 1.11 times less risky than Oceaneering International. It trades about 0.04 of its potential returns per unit of risk. Oceaneering International is currently generating about 0.02 per unit of risk. If you would invest  6,060  in Cactus Inc on September 18, 2024 and sell it today you would earn a total of  234.00  from holding Cactus Inc or generate 3.86% return on investment over 90 days.

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

Cactus Inc  vs.  Oceaneering International

Cactus Inc

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Cactus Inc are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical indicators, Cactus is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Oceaneering International

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Oceaneering International are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong forward indicators, Oceaneering International is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Cactus and Oceaneering International

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

The idea behind Cactus Inc and Oceaneering International 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.