Correlation Between Forum Energy and Schlumberger

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

Diversification Opportunities for Forum Energy and Schlumberger

0.79
  Correlation Coefficient

Poor diversification

The 3 months correlation between Forum and Schlumberger is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Forum Energy Technologies and Schlumberger NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Schlumberger NV and Forum 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 Forum Energy Technologies are associated (or correlated) with Schlumberger. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Schlumberger NV has no effect on the direction of Forum Energy i.e., Forum Energy and Schlumberger go up and down completely randomly.

Pair Corralation between Forum Energy and Schlumberger

Considering the 90-day investment horizon Forum Energy Technologies is expected to under-perform the Schlumberger. But the stock apears to be less risky and, when comparing its historical volatility, Forum Energy Technologies is 1.6 times less risky than Schlumberger. The stock trades about -0.46 of its potential returns per unit of risk. The Schlumberger NV is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  3,685  in Schlumberger NV on July 3, 2022 and sell it today you would lose (95.00)  from holding Schlumberger NV or give up 2.58% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Forum Energy Technologies  vs.  Schlumberger NV

 Performance (%) 
       Timeline  
Forum Energy Technologies 
Forum Performance
4 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Forum Energy Technologies are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively conflicting technical and fundamental indicators, Forum Energy unveiled solid returns over the last few months and may actually be approaching a breakup point.

Forum Price Channel

Schlumberger NV 
Schlumberger Performance
4 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Schlumberger NV are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat conflicting essential indicators, Schlumberger may actually be approaching a critical reversion point that can send shares even higher in November 2022.

Schlumberger Price Channel

Forum Energy and Schlumberger Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Forum Energy and Schlumberger

The main advantage of trading using opposite Forum Energy and Schlumberger positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Forum Energy position performs unexpectedly, Schlumberger 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 Schlumberger will offset losses from the drop in Schlumberger's long position.
Forum Energy vs. Amazon Inc
The idea behind Forum Energy Technologies and Schlumberger NV 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.
Schlumberger 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.

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