Correlation Between DICKER DATA and NOV

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

By analyzing existing cross correlation between DICKER DATA LTD and NOV Inc, you can compare the effects of market volatilities on DICKER DATA and NOV 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 DICKER DATA with a short position of NOV. Check out your portfolio center. Please also check ongoing floating volatility patterns of DICKER DATA and NOV.

Diversification Opportunities for DICKER DATA and NOV

-0.1

Correlation Coefficient

DICKER DATA  NOV

Good diversification

The 3 months correlation between DICKER and NOV is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding DICKER DATA LTD and NOV Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NOV Inc and DICKER DATA 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 DICKER DATA LTD are associated (or correlated) with NOV. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NOV Inc has no effect on the direction of DICKER DATA i.e., DICKER DATA and NOV go up and down completely randomly.

Pair Corralation between DICKER DATA and NOV

Assuming the 90 days horizon DICKER DATA LTD is expected to under-perform the NOV. But the stock apears to be less risky and, when comparing its historical volatility, DICKER DATA LTD is 1.04 times less risky than NOV. The stock trades about -0.04 of its potential returns per unit of risk. The NOV Inc is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  1,416  in NOV Inc on September 13, 2024 and sell it today you would earn a total of  13.00  from holding NOV Inc or generate 0.92% return on investment over 90 days.

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

DICKER DATA LTD  vs.  NOV Inc

DICKER DATA LTD

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days DICKER DATA LTD has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, DICKER DATA is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

NOV Inc

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in NOV Inc are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, NOV is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with DICKER DATA and NOV

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

The idea behind DICKER DATA LTD and NOV Inc 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.