Correlation Between NCS Multistage and Bristow

Can any of the company-specific risk be diversified away by investing in both NCS Multistage and Bristow 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 Bristow 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 Bristow Group, you can compare the effects of market volatilities on NCS Multistage and Bristow 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 Bristow. Check out your portfolio center. Please also check ongoing floating volatility patterns of NCS Multistage and Bristow.

Diversification Opportunities for NCS Multistage and Bristow

0.68

Correlation Coefficient

NCS Multistage  Bristow

Poor diversification

The 3 months correlation between NCS and Bristow is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding NCS Multistage Holdings and Bristow Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bristow Group 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 Bristow. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bristow Group has no effect on the direction of NCS Multistage i.e., NCS Multistage and Bristow go up and down completely randomly.

Pair Corralation between NCS Multistage and Bristow

Given the investment horizon of 90 days NCS Multistage Holdings is expected to generate 1.64 times more return on investment than Bristow. However, NCS Multistage is 1.64 times more volatile than Bristow Group. It trades about 0.11 of its potential returns per unit of risk. Bristow Group is currently generating about 0.05 per unit of risk. If you would invest  2,083  in NCS Multistage Holdings on September 12, 2024 and sell it today you would earn a total of  497.00  from holding NCS Multistage Holdings or generate 23.86% return on investment over 90 days.

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

NCS Multistage Holdings  vs.  Bristow Group

NCS Multistage Holdings

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in NCS Multistage Holdings are ranked lower than 8 (%) 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.

Bristow Group

Risk-Adjusted Performance

4 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Bristow Group are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite quite uncertain basic indicators, Bristow may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with NCS Multistage and Bristow

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

The idea behind NCS Multistage Holdings and Bristow Group 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.