Correlation Between Helix Energy and Nine Energy

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

By analyzing existing cross correlation between Helix Energy Solutions and Nine Energy Service, you can compare the effects of market volatilities on Helix Energy and Nine Energy 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 Helix Energy with a short position of Nine Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Helix Energy and Nine Energy.

Diversification Opportunities for Helix Energy and Nine Energy

0.23

Correlation Coefficient

Helix Energy  Nine Energy

Modest diversification

The 3 months correlation between Helix and Nine is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Helix Energy Solutions and Nine Energy Service in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nine Energy Service and Helix Energy 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 Helix Energy Solutions are associated (or correlated) with Nine Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nine Energy Service has no effect on the direction of Helix Energy i.e., Helix Energy and Nine Energy go up and down completely randomly.

Pair Corralation between Helix Energy and Nine Energy

Considering the 90-day investment horizon Helix Energy Solutions is expected to under-perform the Nine Energy. But the stock apears to be less risky and, when comparing its historical volatility, Helix Energy Solutions is 2.73 times less risky than Nine Energy. The stock trades about -0.01 of its potential returns per unit of risk. The Nine Energy Service is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  102.00  in Nine Energy Service on December 27, 2024 and sell it today you would earn a total of  25.00  from holding Nine Energy Service or generate 24.51% return on investment over 90 days.

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

Helix Energy Solutions  vs.  Nine Energy Service

Helix Energy Solutions

Risk-Adjusted Performance

Very Weak

Over the last 90 days Helix Energy Solutions has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong essential indicators, Helix Energy is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Nine Energy Service

Risk-Adjusted Performance

Modest

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

Pair Trading with Helix Energy and Nine Energy

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

The idea behind Helix Energy Solutions and Nine Energy Service 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.