Correlation Between Nabors Industries and China Distance

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

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

Diversification Opportunities for Nabors Industries and China Distance

0.0

Correlation Coefficient

Nabors Industries  China Distance

Pay attention - limited upside

The 3 months correlation between Nabors and China is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Nabors Industries and China Distance Education in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Distance Education and Nabors Industries 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 Nabors Industries are associated (or correlated) with China Distance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Distance Education has no effect on the direction of Nabors Industries i.e., Nabors Industries and China Distance go up and down completely randomly.

Pair Corralation between Nabors Industries and China Distance

If you would invest (100.00) in China Distance Education on February 2, 2024 and sell it today you would earn a total of  100.00  from holding China Distance Education or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Nabors Industries  vs.  China Distance Education

Nabors Industries

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nabors Industries has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest weak performance, the Stock's fundamental drivers remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

China Distance Education

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Nabors Industries and China Distance

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

The idea behind Nabors Industries and China Distance Education 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.