Correlation Between Schlumberger and O I

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

By analyzing existing cross correlation between Schlumberger NV and O I Glass, you can compare the effects of market volatilities on Schlumberger and O I 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 Schlumberger with a short position of O I. Check out your portfolio center. Please also check ongoing floating volatility patterns of Schlumberger and O I.

Diversification Opportunities for Schlumberger and O I

-0.04

Correlation Coefficient

Schlumberger  O I

Good diversification

The 3 months correlation between Schlumberger and O I is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Schlumberger NV and O I Glass in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on O I Glass and Schlumberger 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 Schlumberger NV are associated (or correlated) with O I. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of O I Glass has no effect on the direction of Schlumberger i.e., Schlumberger and O I go up and down completely randomly.

Pair Corralation between Schlumberger and O I

Considering the 90-day investment horizon Schlumberger NV is expected to under-perform the O I. But the stock apears to be less risky and, when comparing its historical volatility, Schlumberger NV is 2.28 times less risky than O I. The stock trades about -0.38 of its potential returns per unit of risk. The O I Glass is currently generating about -0.08 of returns per unit of risk over similar time horizon. If you would invest  1,555  in O I Glass on January 23, 2024 and sell it today you would lose (74.00) from holding O I Glass or give up 4.76% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Schlumberger NV  vs.  O I Glass

Schlumberger NV

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Schlumberger NV has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong essential indicators, Schlumberger is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

O I Glass

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days O I Glass has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong forward indicators, O I is not utilizing all of its potentials. The newest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Schlumberger and O I

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

The idea behind Schlumberger NV and O I Glass 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.