Correlation Between Core Laboratories and Recon Technology
Can any of the company-specific risk be diversified away by investing in both Core Laboratories and Recon Technology 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 Core Laboratories and Recon Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Core Laboratories NV and Recon Technology, you can compare the effects of market volatilities on Core Laboratories and Recon Technology 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 Core Laboratories with a short position of Recon Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Core Laboratories and Recon Technology.
Diversification Opportunities for Core Laboratories and Recon Technology
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Core and Recon is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Core Laboratories NV and Recon Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Recon Technology and Core Laboratories 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 Core Laboratories NV are associated (or correlated) with Recon Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Recon Technology has no effect on the direction of Core Laboratories i.e., Core Laboratories and Recon Technology go up and down completely randomly.
Pair Corralation between Core Laboratories and Recon Technology
Considering the 90-day investment horizon Core Laboratories NV is expected to generate 0.46 times more return on investment than Recon Technology. However, Core Laboratories NV is 2.17 times less risky than Recon Technology. It trades about 0.02 of its potential returns per unit of risk. Recon Technology is currently generating about -0.03 per unit of risk. If you would invest 1,867 in Core Laboratories NV on September 2, 2024 and sell it today you would earn a total of 168.00 from holding Core Laboratories NV or generate 9.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Core Laboratories NV vs. Recon Technology
Performance |
| Timeline |
| Core Laboratories |
| Recon Technology |
Core Laboratories and Recon Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Core Laboratories and Recon Technology
The main advantage of trading using opposite Core Laboratories and Recon Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Core Laboratories position performs unexpectedly, Recon Technology 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 Recon Technology will offset losses from the drop in Recon Technology's long position.| Core Laboratories vs. Bristow Group | Core Laboratories vs. RPC Inc | Core Laboratories vs. NOV Inc | Core Laboratories vs. Oceaneering International |
| Recon Technology vs. Saipem SpA | Recon Technology vs. Worley Parsons | Recon Technology vs. Petrofac Ltd ADR | Recon Technology vs. Calfrac Well Services |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
Other Complementary Tools
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges | |
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device | |
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments |