Correlation Between SEACOR Marine and NCS Multistage

Can any of the company-specific risk be diversified away by investing in both SEACOR Marine and NCS Multistage 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 SEACOR Marine and NCS Multistage into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between SEACOR Marine Holdings and NCS Multistage Holdings, you can compare the effects of market volatilities on SEACOR Marine and NCS Multistage 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 SEACOR Marine with a short position of NCS Multistage. Check out your portfolio center. Please also check ongoing floating volatility patterns of SEACOR Marine and NCS Multistage.

Diversification Opportunities for SEACOR Marine and NCS Multistage

-0.79

Correlation Coefficient

SEACOR Marine  NCS Multistage

Pay attention - limited upside

The 3 months correlation between SEACOR and NCS is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding SEACOR Marine Holdings and NCS Multistage Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NCS Multistage Holdings and SEACOR Marine 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 SEACOR Marine Holdings are associated (or correlated) with NCS Multistage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NCS Multistage Holdings has no effect on the direction of SEACOR Marine i.e., SEACOR Marine and NCS Multistage go up and down completely randomly.

Pair Corralation between SEACOR Marine and NCS Multistage

Given the investment horizon of 90 days SEACOR Marine Holdings is expected to under-perform the NCS Multistage. But the stock apears to be less risky and, when comparing its historical volatility, SEACOR Marine Holdings is 1.28 times less risky than NCS Multistage. The stock trades about -0.12 of its potential returns per unit of risk. The NCS Multistage Holdings is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  2,295  in NCS Multistage Holdings on September 26, 2024 and sell it today you would earn a total of  154.00  from holding NCS Multistage Holdings or generate 6.71% return on investment over 90 days.

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

SEACOR Marine Holdings  vs.  NCS Multistage Holdings

SEACOR Marine Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SEACOR Marine Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's technical indicators remain fairly strong which may send shares a bit higher in January 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

NCS Multistage Holdings

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in NCS Multistage Holdings are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very fragile basic indicators, NCS Multistage displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SEACOR Marine and NCS Multistage

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

The idea behind SEACOR Marine Holdings and NCS Multistage Holdings 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.