Correlation Between TGS NOPEC and Electromagnetic Geoservices

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

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

Diversification Opportunities for TGS NOPEC and Electromagnetic Geoservices

-0.24

Correlation Coefficient

TGS NOPEC  Electromagnetic Geoservices

Very good diversification

The 3 months correlation between TGS and Electromagnetic is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding TGS NOPEC Geophysical and Electromagnetic Geoservices AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Electromagnetic Geoservices and TGS NOPEC 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 TGS NOPEC Geophysical are associated (or correlated) with Electromagnetic Geoservices. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Electromagnetic Geoservices has no effect on the direction of TGS NOPEC i.e., TGS NOPEC and Electromagnetic Geoservices go up and down completely randomly.

Pair Corralation between TGS NOPEC and Electromagnetic Geoservices

Assuming the 90 days trading horizon TGS NOPEC Geophysical is expected to under-perform the Electromagnetic Geoservices. But the stock apears to be less risky and, when comparing its historical volatility, TGS NOPEC Geophysical is 1.47 times less risky than Electromagnetic Geoservices. The stock trades about -0.27 of its potential returns per unit of risk. The Electromagnetic Geoservices ASA is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  196.00  in Electromagnetic Geoservices ASA on April 23, 2025 and sell it today you would lose (9.00) from holding Electromagnetic Geoservices ASA or give up 4.59% of portfolio value over 90 days.

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

TGS NOPEC Geophysical  vs.  Electromagnetic Geoservices AS

TGS NOPEC Geophysical

Risk-Adjusted Performance

Very Weak

Over the last 90 days TGS NOPEC Geophysical has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, TGS NOPEC is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Electromagnetic Geoservices

Risk-Adjusted Performance

Very Weak

Over the last 90 days Electromagnetic Geoservices ASA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent essential indicators, Electromagnetic Geoservices is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with TGS NOPEC and Electromagnetic Geoservices

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

The idea behind TGS NOPEC Geophysical and Electromagnetic Geoservices 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.

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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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.