Correlation Between TechnipFMC Plc and Archrock

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

Diversification Opportunities for TechnipFMC Plc and Archrock

-0.6
  Correlation Coefficient

Excellent diversification

The 3 months correlation between TechnipFMC and Archrock is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding TechnipFMC Plc and Archrock in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Archrock and TechnipFMC Plc 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 TechnipFMC Plc 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 TechnipFMC Plc i.e., TechnipFMC Plc and Archrock go up and down completely randomly.

Pair Corralation between TechnipFMC Plc and Archrock

Considering the 90-day investment horizon TechnipFMC Plc is expected to generate 1.3 times more return on investment than Archrock. However, TechnipFMC Plc is 1.3 times more volatile than Archrock. It trades about -0.03 of its potential returns per unit of risk. Archrock is currently generating about -0.37 per unit of risk. If you would invest  858.00  in TechnipFMC Plc on June 27, 2022 and sell it today you would lose (23.00)  from holding TechnipFMC Plc or give up 2.68% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy95.45%
ValuesDaily Returns

TechnipFMC Plc  vs.  Archrock

 Performance (%) 
       Timeline  
TechnipFMC Plc 
TechnipFMC Performance
9 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in TechnipFMC Plc are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, TechnipFMC Plc reported solid returns over the last few months and may actually be approaching a breakup point.

TechnipFMC 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 weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in October 2022. The current disturbance may also be a sign of long term up-swing for the company investors.

Archrock Price Channel

TechnipFMC Plc and Archrock Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with TechnipFMC Plc and Archrock

The main advantage of trading using opposite TechnipFMC Plc and Archrock positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TechnipFMC Plc 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.
TechnipFMC Plc vs. Industrias Bachoco SA
The idea behind TechnipFMC Plc 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. Industrias Bachoco SA
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.

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