Correlation Between Corporacion America and Nabors Industries

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

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

Diversification Opportunities for Corporacion America and Nabors Industries

0.64

Correlation Coefficient

Corporacion America  Nabors Industries

Poor diversification

The 3 months correlation between Corporacion and Nabors is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Corporacion America Airports and Nabors Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nabors Industries and Corporacion America 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 Corporacion America Airports 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 Corporacion America i.e., Corporacion America and Nabors Industries go up and down completely randomly.

Pair Corralation between Corporacion America and Nabors Industries

Given the investment horizon of 90 days Corporacion America Airports is expected to generate 0.27 times more return on investment than Nabors Industries. However, Corporacion America Airports is 3.7 times less risky than Nabors Industries. It trades about -0.02 of its potential returns per unit of risk. Nabors Industries is currently generating about -0.08 per unit of risk. If you would invest  1,890  in Corporacion America Airports on December 23, 2024 and sell it today you would lose (80.00) from holding Corporacion America Airports or give up 4.23% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.39%
Values	Daily Returns

Corporacion America Airports  vs.  Nabors Industries

Corporacion America

Risk-Adjusted Performance

Very Weak

Over the last 90 days Corporacion America Airports has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Corporacion America is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Nabors Industries

Risk-Adjusted Performance

Very Weak

Over the last 90 days Nabors Industries 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 basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Corporacion America and Nabors Industries

The main advantage of trading using opposite Corporacion America and Nabors Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Corporacion America 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 Corporacion America Airports 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.

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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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.