Correlation Between Basic Energy and Archrock

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

Diversification Opportunities for Basic Energy and Archrock

-0.68
  Correlation Coefficient

Excellent diversification

The 3 months correlation between Basic and Archrock is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Basic Energy Services and Archrock in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Archrock and Basic Energy 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 Basic Energy Services 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 Basic Energy i.e., Basic Energy and Archrock go up and down completely randomly.

Pair Corralation between Basic Energy and Archrock

If you would invest  0.00  in Basic Energy Services on July 3, 2022 and sell it today you would earn a total of  0.00  from holding Basic Energy Services or generate 0.0% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy9.09%
ValuesDaily Returns

Basic Energy Services  vs.  Archrock

 Performance (%) 
       Timeline  
Basic Energy Services 
Basic Performance
0 of 100
Over the last 90 days Basic Energy Services has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very conflicting basic indicators, Basic Energy displayed solid returns over the last few months and may actually be approaching a breakup point.
Archrock 
Archrock Performance
0 of 100
Over the last 90 days Archrock has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in November 2022. The current disturbance may also be a sign of long term up-swing for the company investors.

Archrock Price Channel

Basic Energy and Archrock Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Basic Energy and Archrock

The main advantage of trading using opposite Basic Energy and Archrock positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Basic Energy 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.
Basic Energy vs. Amazon Inc
The idea behind Basic Energy Services 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.
Archrock vs. Amazon Inc
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..

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