Correlation Between Oceaneering International and TGS ASA

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

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

Diversification Opportunities for Oceaneering International and TGS ASA

-0.44

Correlation Coefficient

Oceaneering International  TGS ASA

Very good diversification

The 3 months correlation between Oceaneering and TGS is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Oceaneering International and TGS ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TGS ASA and Oceaneering International 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 Oceaneering International are associated (or correlated) with TGS ASA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TGS ASA has no effect on the direction of Oceaneering International i.e., Oceaneering International and TGS ASA go up and down completely randomly.

Pair Corralation between Oceaneering International and TGS ASA

Considering the 90-day investment horizon Oceaneering International is expected to under-perform the TGS ASA. But the stock apears to be less risky and, when comparing its historical volatility, Oceaneering International is 1.02 times less risky than TGS ASA. The stock trades about -0.13 of its potential returns per unit of risk. The TGS ASA is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest  987.00  in TGS ASA on September 13, 2024 and sell it today you would lose (27.00) from holding TGS ASA or give up 2.74% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	95.45%
Values	Daily Returns

Oceaneering International  vs.  TGS ASA

Oceaneering International

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Oceaneering International are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak forward indicators, Oceaneering International demonstrated solid returns over the last few months and may actually be approaching a breakup point.

TGS ASA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days TGS ASA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, TGS ASA is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Oceaneering International and TGS ASA

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

The idea behind Oceaneering International and TGS ASA 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.

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 the Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.