Correlation Between Apptech Corp and Patterson-UTI Energy

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Can any of the company-specific risk be diversified away by investing in both Apptech Corp and Patterson-UTI Energy 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 Apptech Corp and Patterson-UTI Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Apptech Corp and Patterson-UTI Energy, you can compare the effects of market volatilities on Apptech Corp and Patterson-UTI Energy 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 Apptech Corp with a short position of Patterson-UTI Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apptech Corp and Patterson-UTI Energy.

Diversification Opportunities for Apptech Corp and Patterson-UTI Energy

0.53
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Apptech and Patterson-UTI is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Apptech Corp 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 Apptech Corp 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 Apptech Corp are associated (or correlated) with Patterson-UTI Energy. 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 Apptech Corp i.e., Apptech Corp and Patterson-UTI Energy go up and down completely randomly.

Pair Corralation between Apptech Corp and Patterson-UTI Energy

Given the investment horizon of 90 days Apptech Corp is expected to generate 2.48 times more return on investment than Patterson-UTI Energy. However, Apptech Corp is 2.48 times more volatile than Patterson-UTI Energy. It trades about 0.19 of its potential returns per unit of risk. Patterson-UTI Energy is currently generating about -0.11 per unit of risk. If you would invest  78.00  in Apptech Corp on September 6, 2022 and sell it today you would earn a total of  20.00  from holding Apptech Corp or generate 25.64% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Apptech Corp  vs.  Patterson-UTI Energy

 Performance (%) 
       Timeline  
Apptech Corp 
Apptech Performance
8 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Apptech Corp are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal fundamental indicators, Apptech Corp showed solid returns over the last few months and may actually be approaching a breakup point.

Apptech Price Channel

Patterson-UTI Energy 
Patterson-UTI Performance
6 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Patterson-UTI Energy are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite quite unsteady technical and fundamental indicators, Patterson-UTI Energy disclosed solid returns over the last few months and may actually be approaching a breakup point.

Patterson-UTI Price Channel

Apptech Corp and Patterson-UTI Energy Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Apptech Corp and Patterson-UTI Energy

The main advantage of trading using opposite Apptech Corp and Patterson-UTI Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apptech Corp position performs unexpectedly, Patterson-UTI Energy 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 Energy will offset losses from the drop in Patterson-UTI Energy's long position.
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The idea behind Apptech Corp 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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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 CEO Directory module to screen CEOs from public companies around the world.

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