Correlation Between Profire Ene and National Energy

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

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

Diversification Opportunities for Profire Ene and National Energy

0.0

Correlation Coefficient

Profire Ene  National Energy

Pay attention - limited upside

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

Pair Corralation between Profire Ene and National Energy

If you would invest (100.00) in Profire Ene on December 2, 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

Profire Ene  vs.  National Energy Services

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.

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.

Pair Trading with Profire Ene and National Energy

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

The idea behind Profire Ene and National 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.