Correlation Between National Energy and CGG SA

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

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

Diversification Opportunities for National Energy and CGG SA

0.38

Correlation Coefficient

National Energy  CGG SA

Weak diversification

The 3 months correlation between National and CGG is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding National Energy Services 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 National 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 National Energy Services 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 National Energy i.e., National Energy and CGG SA go up and down completely randomly.

Pair Corralation between National Energy and CGG SA

If you would invest  846.00  in National Energy Services on October 24, 2024 and sell it today you would earn a total of  92.00  from holding National Energy Services or generate 10.87% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	5.56%
Values	Daily Returns

National Energy Services  vs.  CGG SA ADR

National Energy Services

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days National Energy Services has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, National Energy is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

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 National Energy and CGG SA

The main advantage of trading using opposite National Energy and CGG SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Energy 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 National Energy Services 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.