Correlation Between Nabors Industries and Buhler Industries

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

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

Diversification Opportunities for Nabors Industries and Buhler Industries

0.0

Correlation Coefficient

Nabors Industries  Buhler Industries

Pay attention - limited upside

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

Pair Corralation between Nabors Industries and Buhler Industries

Considering the 90-day investment horizon Nabors Industries is expected to under-perform the Buhler Industries. In addition to that, Nabors Industries is 2.99 times more volatile than Buhler Industries. It trades about -0.03 of its total potential returns per unit of risk. Buhler Industries is currently generating about 0.05 per unit of volatility. If you would invest  150.00  in Buhler Industries on October 23, 2024 and sell it today you would earn a total of  38.00  from holding Buhler Industries or generate 25.33% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	99.58%
Values	Daily Returns

Nabors Industries  vs.  Buhler Industries

Nabors Industries

Risk-Adjusted Performance

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Very Weak

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

Buhler Industries

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Nabors Industries and Buhler Industries

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

The idea behind Nabors Industries and Buhler 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.