Correlation Between Applied Blockchain and Nabors Industries

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

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

Diversification Opportunities for Applied Blockchain and Nabors Industries

-0.42

Correlation Coefficient

Applied Blockchain  Nabors Industries

Very good diversification

The 3 months correlation between Applied and Nabors is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Applied Blockchain and Nabors Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nabors Industries and Applied Blockchain 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 Applied Blockchain are associated (or correlated) with Nabors Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nabors Industries has no effect on the direction of Applied Blockchain i.e., Applied Blockchain and Nabors Industries go up and down completely randomly.

Pair Corralation between Applied Blockchain and Nabors Industries

Given the investment horizon of 90 days Applied Blockchain is expected to generate 1.19 times more return on investment than Nabors Industries. However, Applied Blockchain is 1.19 times more volatile than Nabors Industries. It trades about -0.05 of its potential returns per unit of risk. Nabors Industries is currently generating about -0.36 per unit of risk. If you would invest  915.00  in Applied Blockchain on September 22, 2024 and sell it today you would lose (93.00) from holding Applied Blockchain or give up 10.16% of portfolio value over 90 days.

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

Applied Blockchain  vs.  Nabors Industries

Applied Blockchain

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Applied Blockchain are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak essential indicators, Applied Blockchain exhibited solid returns over the last few months and may actually be approaching a breakup point.

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. Despite unfluctuating performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Applied Blockchain and Nabors Industries

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

The idea behind Applied Blockchain and Nabors Industries 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.