Correlation Between National Energy and Key Energy

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

Diversification Opportunities for National Energy and Key Energy

0.0

Correlation Coefficient

National Energy  Key Energy

Pay attention - limited upside

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

Pair Corralation between National Energy and Key Energy

If you would invest  39.00  in National Energy Services on December 25, 2024 and sell it today you would lose (5.00) from holding National Energy Services or give up 12.82% of portfolio value over 90 days.

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

National Energy Services  vs.  Key Energy Services

National Energy Services

Risk-Adjusted Performance

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in National Energy Services are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, National Energy may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Key Energy Services

Risk-Adjusted Performance

Very Weak

Over the last 90 days Key Energy Services has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong technical and fundamental indicators, Key Energy 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 Key Energy

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

The idea behind National Energy Services and Key Energy Services 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.