Correlation Between Baker Hughes and Archrock

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

Diversification Opportunities for Baker Hughes and Archrock

0.78
  Correlation Coefficient

Poor diversification

The 3 months correlation between Baker and Archrock is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Baker Hughes A and Archrock in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Archrock 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 A 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 Baker Hughes i.e., Baker Hughes and Archrock go up and down completely randomly.

Pair Corralation between Baker Hughes and Archrock

Considering the 90-day investment horizon Baker Hughes A is expected to generate 1.09 times more return on investment than Archrock. However, Baker Hughes is 1.09 times more volatile than Archrock. It trades about 0.03 of its potential returns per unit of risk. Archrock is currently generating about 0.0 per unit of risk. If you would invest  2,093  in Baker Hughes A on July 9, 2022 and sell it today you would earn a total of  230.00  from holding Baker Hughes A or generate 10.99% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Baker Hughes A  vs.  Archrock

 Performance (%) 
       Timeline  
Baker Hughes A 
Baker Performance
0 of 100
Over the last 90 days Baker Hughes A has generated negative risk-adjusted returns adding no value to investors with long positions. Even with conflicting performance in the last few months, the Stock's forward-looking signals remain relatively invariable which may send shares a bit higher in November 2022. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Baker Price Channel

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 latest conflicting performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Archrock Price Channel

Baker Hughes and Archrock Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Baker Hughes and Archrock

The main advantage of trading using opposite Baker Hughes and Archrock positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Baker Hughes 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.
Baker Hughes vs. Amazon Inc
The idea behind Baker Hughes A 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 Transaction History module to view history of all your transactions and understand their impact on performance.

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