Correlation Between NCS Multistage and SEACOR Marine

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

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

Diversification Opportunities for NCS Multistage and SEACOR Marine

-0.76

Correlation Coefficient

NCS Multistage  SEACOR Marine

Pay attention - limited upside

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

Pair Corralation between NCS Multistage and SEACOR Marine

Given the investment horizon of 90 days NCS Multistage Holdings is expected to generate 1.29 times more return on investment than SEACOR Marine. However, NCS Multistage is 1.29 times more volatile than SEACOR Marine Holdings. It trades about 0.05 of its potential returns per unit of risk. SEACOR Marine Holdings is currently generating about -0.18 per unit of risk. If you would invest  2,295  in NCS Multistage Holdings on September 24, 2024 and sell it today you would earn a total of  65.00  from holding NCS Multistage Holdings or generate 2.83% return on investment over 90 days.

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

NCS Multistage Holdings  vs.  SEACOR Marine Holdings

NCS Multistage Holdings

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in NCS Multistage Holdings are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very fragile basic indicators, NCS Multistage displayed solid returns over the last few months and may actually be approaching a breakup point.

SEACOR Marine Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SEACOR Marine Holdings 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 technical indicators remain fairly strong which may send shares a bit higher in January 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with NCS Multistage and SEACOR Marine

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

The idea behind NCS Multistage Holdings and SEACOR Marine Holdings 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.