Correlation Between Halliburton and Ledesma SAAI

Can any of the company-specific risk be diversified away by investing in both Halliburton and Ledesma SAAI 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 Halliburton and Ledesma SAAI into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Halliburton Co and Ledesma SAAI, you can compare the effects of market volatilities on Halliburton and Ledesma SAAI 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 Halliburton with a short position of Ledesma SAAI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Halliburton and Ledesma SAAI.

Diversification Opportunities for Halliburton and Ledesma SAAI

0.48

Correlation Coefficient

Halliburton  Ledesma SAAI

Very weak diversification

The 3 months correlation between Halliburton and Ledesma is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Halliburton Co and Ledesma SAAI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ledesma SAAI and Halliburton 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 Halliburton Co are associated (or correlated) with Ledesma SAAI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ledesma SAAI has no effect on the direction of Halliburton i.e., Halliburton and Ledesma SAAI go up and down completely randomly.

Pair Corralation between Halliburton and Ledesma SAAI

Assuming the 90 days trading horizon Halliburton Co is expected to under-perform the Ledesma SAAI. But the stock apears to be less risky and, when comparing its historical volatility, Halliburton Co is 1.28 times less risky than Ledesma SAAI. The stock trades about -0.28 of its potential returns per unit of risk. The Ledesma SAAI is currently generating about 0.32 of returns per unit of risk over similar time horizon. If you would invest  99,500  in Ledesma SAAI on June 23, 2024 and sell it today you would earn a total of  14,500  from holding Ledesma SAAI or generate 14.57% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.65%
Values	Daily Returns

Halliburton Co  vs.  Ledesma SAAI

Halliburton

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Halliburton Co 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 essential indicators remain somewhat strong which may send shares a bit higher in October 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Ledesma SAAI

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Ledesma SAAI are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Ledesma SAAI is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Halliburton and Ledesma SAAI

The main advantage of trading using opposite Halliburton and Ledesma SAAI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Halliburton position performs unexpectedly, Ledesma SAAI 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 Ledesma SAAI will offset losses from the drop in Ledesma SAAI's long position.

The idea behind Halliburton Co and Ledesma SAAI 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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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 the Global Correlations module to find global opportunities by holding instruments from different markets.