Correlation Between NCS Multistage and CGG SA

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

By analyzing existing cross correlation between NCS Multistage Holdings and CGG SA ADR, you can compare the effects of market volatilities on NCS Multistage and CGG SA 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 NCS Multistage with a short position of CGG SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of NCS Multistage and CGG SA.

Diversification Opportunities for NCS Multistage and CGG SA

-0.07

Correlation Coefficient

NCS Multistage  CGG SA

Good diversification

The 3 months correlation between NCS and CGG is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding NCS Multistage Holdings and CGG SA ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CGG SA ADR and NCS Multistage 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 NCS Multistage Holdings are associated (or correlated) with CGG SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CGG SA ADR has no effect on the direction of NCS Multistage i.e., NCS Multistage and CGG SA go up and down completely randomly.

Pair Corralation between NCS Multistage and CGG SA

If you would invest  1,972  in NCS Multistage Holdings on September 29, 2024 and sell it today you would earn a total of  500.00  from holding NCS Multistage Holdings or generate 25.35% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	1.59%
Values	Daily Returns

NCS Multistage Holdings  vs.  CGG SA ADR

NCS Multistage Holdings

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in NCS Multistage Holdings are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very fragile basic indicators, NCS Multistage displayed solid returns over the last few months and may actually be approaching a breakup point.

CGG SA ADR

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with NCS Multistage and CGG SA

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

The idea behind NCS Multistage Holdings and CGG SA ADR 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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.