Correlation Between Baker Hughes and Alpha Technologies

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

Diversification Opportunities for Baker Hughes and Alpha Technologies

0.0
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between Baker and Alpha is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Baker Hughes Co and Alpha Technologies Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alpha Technologies and Baker Hughes 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 Baker Hughes Co are associated (or correlated) with Alpha Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alpha Technologies has no effect on the direction of Baker Hughes i.e., Baker Hughes and Alpha Technologies go up and down completely randomly.

Pair Corralation between Baker Hughes and Alpha Technologies

Considering the 90-day investment horizon Baker Hughes Co is expected to generate 0.45 times more return on investment than Alpha Technologies. However, Baker Hughes Co is 2.21 times less risky than Alpha Technologies. It trades about 0.04 of its potential returns per unit of risk. Alpha Technologies Group is currently generating about -0.06 per unit of risk. If you would invest  2,431  in Baker Hughes Co on September 4, 2022 and sell it today you would earn a total of  520.00  from holding Baker Hughes Co or generate 21.39% return on investment over 90 days.
Time Period3 Months [change]
DirectionFlat 
StrengthInsignificant
Accuracy98.8%
ValuesDaily Returns

Baker Hughes Co  vs.  Alpha Technologies Group

 Performance (%) 
       Timeline  
Baker Hughes 
Baker Performance
8 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Baker Hughes Co are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak forward-looking signals, Baker Hughes reported solid returns over the last few months and may actually be approaching a breakup point.

Baker Price Channel

Alpha Technologies 
Alpha Performance
0 of 100
Over the last 90 days Alpha Technologies Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Alpha Technologies is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Alpha Price Channel

Baker Hughes and Alpha Technologies Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Baker Hughes and Alpha Technologies

The main advantage of trading using opposite Baker Hughes and Alpha Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Baker Hughes position performs unexpectedly, Alpha Technologies 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 Alpha Technologies will offset losses from the drop in Alpha Technologies' long position.
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The idea behind Baker Hughes Co and Alpha Technologies Group 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.

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