Correlation Between National Energy and Profire Ene

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

Diversification Opportunities for National Energy and Profire Ene

0.0

Correlation Coefficient

National Energy  Profire Ene

Pay attention - limited upside

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

Pair Corralation between National Energy and Profire Ene

If you would invest (100.00) in Profire Ene on December 29, 2024 and sell it today you would earn a total of  100.00  from holding Profire Ene or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

National Energy Services  vs.  Profire Ene

National Energy Services

Risk-Adjusted Performance

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 latest unfluctuating performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Profire Ene

Risk-Adjusted Performance

Very Weak

Over the last 90 days Profire Ene has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound forward indicators, Profire Ene is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with National Energy and Profire Ene

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

The idea behind National Energy Services and Profire Ene 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.

Check out your portfolio center.

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.