Correlation Between Patterson UTI and Northann Corp

Can any of the company-specific risk be diversified away by investing in both Patterson UTI and Northann Corp 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 Patterson UTI and Northann Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Patterson UTI and Northann Corp

0.43

Correlation Coefficient

Patterson UTI  Northann Corp

Very weak diversification

The 3 months correlation between Patterson and Northann is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Patterson UTI Energy and Northann Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Northann Corp and Patterson UTI 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 Patterson UTI Energy are associated (or correlated) with Northann Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Northann Corp has no effect on the direction of Patterson UTI i.e., Patterson UTI and Northann Corp go up and down completely randomly.

Pair Corralation between Patterson UTI and Northann Corp

Given the investment horizon of 90 days Patterson UTI Energy is expected to generate 0.53 times more return on investment than Northann Corp. However, Patterson UTI Energy is 1.9 times less risky than Northann Corp. It trades about 0.08 of its potential returns per unit of risk. Northann Corp is currently generating about -0.04 per unit of risk. If you would invest  745.00  in Patterson UTI Energy on December 21, 2024 and sell it today you would earn a total of  93.00  from holding Patterson UTI Energy or generate 12.48% return on investment over 90 days.

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

Patterson UTI Energy  vs.  Northann Corp

Patterson UTI Energy

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Patterson UTI Energy are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very weak technical and fundamental indicators, Patterson UTI displayed solid returns over the last few months and may actually be approaching a breakup point.

Northann Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Northann Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's fundamental indicators remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Patterson UTI and Northann Corp

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

The idea behind Patterson UTI Energy and Northann Corp 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.