Correlation Between Newpark Resources and Akastor ASA

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

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

Diversification Opportunities for Newpark Resources and Akastor ASA

0.0

Correlation Coefficient

Newpark Resources  Akastor ASA

Pay attention - limited upside

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

Pair Corralation between Newpark Resources and Akastor ASA

If you would invest  712.00  in Newpark Resources on September 13, 2024 and sell it today you would earn a total of  98.00  from holding Newpark Resources or generate 13.76% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Newpark Resources  vs.  Akastor ASA

Newpark Resources

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Newpark Resources are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Even with relatively abnormal basic indicators, Newpark Resources reported solid returns over the last few months and may actually be approaching a breakup point.

Akastor ASA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Akastor ASA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Akastor 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 Newpark Resources and Akastor ASA

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

The idea behind Newpark Resources and Akastor 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.