Correlation Between Klx Energy and Archrock

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

Diversification Opportunities for Klx Energy and Archrock

-0.39
  Correlation Coefficient

Very good diversification

The 3 months correlation between Klx Energy and Archrock is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Klx Energy Services and Archrock in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Archrock and Klx 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 Klx 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 Klx Energy i.e., Klx Energy and Archrock go up and down completely randomly.

Pair Corralation between Klx Energy and Archrock

Given the investment horizon of 90 days Klx Energy Services is expected to generate 3.37 times more return on investment than Archrock. However, Klx Energy is 3.37 times more volatile than Archrock. It trades about -0.02 of its potential returns per unit of risk. Archrock is currently generating about -0.22 per unit of risk. If you would invest  771.00  in Klx Energy Services on July 1, 2022 and sell it today you would lose (74.00)  from holding Klx Energy Services or give up 9.6% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy95.45%
ValuesDaily Returns

Klx Energy Services  vs.  Archrock

 Performance (%) 
       Timeline  
Klx Energy Services 
Klx Energy Performance
10 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Klx Energy Services are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather conflicting basic indicators, Klx Energy exhibited solid returns over the last few months and may actually be approaching a breakup point.

Klx Energy 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 conflicting 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

Klx Energy and Archrock Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Klx Energy and Archrock

The main advantage of trading using opposite Klx Energy and Archrock positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Klx 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.
Klx Energy vs. Amazon Inc
The idea behind Klx 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 Piotroski F Score module to get Piotroski F Score based on binary analysis strategy of nine different fundamentals.

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