Correlation Between Patterson UTI and Nomura Holdings

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

Diversification Opportunities for Patterson UTI and Nomura Holdings

0.31

Correlation Coefficient

Patterson UTI  Nomura Holdings

Weak diversification

The 3 months correlation between Patterson and Nomura is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Patterson UTI Energy and Nomura Holdings ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nomura Holdings ADR 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 Nomura Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nomura Holdings ADR has no effect on the direction of Patterson UTI i.e., Patterson UTI and Nomura Holdings go up and down completely randomly.

Pair Corralation between Patterson UTI and Nomura Holdings

Given the investment horizon of 90 days Patterson UTI Energy is expected to under-perform the Nomura Holdings. In addition to that, Patterson UTI is 1.22 times more volatile than Nomura Holdings ADR. It trades about -0.04 of its total potential returns per unit of risk. Nomura Holdings ADR is currently generating about 0.03 per unit of volatility. If you would invest  600.00  in Nomura Holdings ADR on December 4, 2024 and sell it today you would earn a total of  51.00  from holding Nomura Holdings ADR or generate 8.5% return on investment over 90 days.

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

Patterson UTI Energy  vs.  Nomura Holdings ADR

Patterson UTI Energy

Risk-Adjusted Performance

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Patterson UTI Energy are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy technical and fundamental indicators, Patterson UTI is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Nomura Holdings ADR

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Nomura Holdings ADR are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable primary indicators, Nomura Holdings is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Patterson UTI and Nomura Holdings

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

The idea behind Patterson UTI Energy and Nomura Holdings 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.