Correlation Between Tidewater and Geospace Technologies

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

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

Diversification Opportunities for Tidewater and Geospace Technologies

-0.76

Correlation Coefficient

Tidewater  Geospace Technologies

Pay attention - limited upside

The 3 months correlation between Tidewater and Geospace is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding Tidewater and Geospace Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Geospace Technologies and Tidewater 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 Tidewater are associated (or correlated) with Geospace Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Geospace Technologies has no effect on the direction of Tidewater i.e., Tidewater and Geospace Technologies go up and down completely randomly.

Pair Corralation between Tidewater and Geospace Technologies

Considering the 90-day investment horizon Tidewater is expected to under-perform the Geospace Technologies. In addition to that, Tidewater is 1.09 times more volatile than Geospace Technologies. It trades about -0.14 of its total potential returns per unit of risk. Geospace Technologies is currently generating about 0.07 per unit of volatility. If you would invest  993.00  in Geospace Technologies on August 1, 2024 and sell it today you would earn a total of  167.00  from holding Geospace Technologies or generate 16.82% return on investment over 90 days.

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

Tidewater  vs.  Geospace Technologies

Tidewater

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tidewater has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's fundamental indicators remain fairly stable which may send shares a bit higher in November 2024. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Geospace Technologies

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Geospace Technologies are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively abnormal basic indicators, Geospace Technologies unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Tidewater and Geospace Technologies

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

The idea behind Tidewater and Geospace Technologies 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.