Correlation Between The9 and Nine Energy
Can any of the company-specific risk be diversified away by investing in both The9 and Nine 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 The9 and Nine Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The9 Ltd ADR and Nine Energy Service, you can compare the effects of market volatilities on The9 and Nine 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 The9 with a short position of Nine Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of The9 and Nine Energy.
Diversification Opportunities for The9 and Nine Energy
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between The9 and Nine is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding The9 Ltd ADR and Nine Energy Service in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nine Energy Service and The9 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 The9 Ltd ADR are associated (or correlated) with Nine Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nine Energy Service has no effect on the direction of The9 i.e., The9 and Nine Energy go up and down completely randomly.
Pair Corralation between The9 and Nine Energy
Given the investment horizon of 90 days The9 Ltd ADR is expected to generate 0.82 times more return on investment than Nine Energy. However, The9 Ltd ADR is 1.22 times less risky than Nine Energy. It trades about 0.14 of its potential returns per unit of risk. Nine Energy Service is currently generating about 0.03 per unit of risk. If you would invest 740.00 in The9 Ltd ADR on September 1, 2024 and sell it today you would earn a total of 735.00 from holding The9 Ltd ADR or generate 99.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
The9 Ltd ADR vs. Nine Energy Service
Performance |
| Timeline |
| The9 Ltd ADR |
| Nine Energy Service |
The9 and Nine Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with The9 and Nine Energy
The main advantage of trading using opposite The9 and Nine Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if The9 position performs unexpectedly, Nine 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 Nine Energy will offset losses from the drop in Nine Energy's long position.| The9 vs. Atari SA | The9 vs. Victory Square Technologies | The9 vs. Motorsport Gaming Us | The9 vs. Alpha Esports Tech |
| Nine Energy vs. Enerflex | Nine Energy vs. Now Inc | Nine Energy vs. Bristow Group | Nine Energy vs. Helix Energy Solutions |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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