Correlation Between Bri-Chem Corp and Schlumberger

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

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

Diversification Opportunities for Bri-Chem Corp and Schlumberger

0.85

Correlation Coefficient

Bri-Chem Corp  Schlumberger

Very poor diversification

The 3 months correlation between Bri-Chem and Schlumberger is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Bri Chem Corp and Schlumberger NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Schlumberger NV and Bri-Chem Corp 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 Bri Chem Corp are associated (or correlated) with Schlumberger. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Schlumberger NV has no effect on the direction of Bri-Chem Corp i.e., Bri-Chem Corp and Schlumberger go up and down completely randomly.

Pair Corralation between Bri-Chem Corp and Schlumberger

Assuming the 90 days horizon Bri Chem Corp is expected to under-perform the Schlumberger. In addition to that, Bri-Chem Corp is 4.83 times more volatile than Schlumberger NV. It trades about -0.11 of its total potential returns per unit of risk. Schlumberger NV is currently generating about -0.2 per unit of volatility. If you would invest  5,289  in Schlumberger NV on March 14, 2024 and sell it today you would lose (793.00) from holding Schlumberger NV or give up 14.99% of portfolio value over 90 days.

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

Bri Chem Corp  vs.  Schlumberger NV

Bri Chem Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bri Chem Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Stock's technical and fundamental indicators remain nearly stable which may send shares a bit higher in July 2024. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

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 weak performance in the last few months, the Stock's essential indicators remain somewhat strong which may send shares a bit higher in July 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Bri-Chem Corp and Schlumberger

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

The idea behind Bri Chem Corp and Schlumberger NV 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.