Correlation Between Nine Energy and The9
Can any of the company-specific risk be diversified away by investing in both Nine Energy and The9 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 Nine Energy and The9 into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nine Energy Service and The9 Ltd ADR, you can compare the effects of market volatilities on Nine Energy and The9 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 Nine Energy with a short position of The9. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nine Energy and The9.
Diversification Opportunities for Nine Energy and The9
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Nine and The9 is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Nine Energy Service and The9 Ltd ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on The9 Ltd ADR and Nine Energy 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 Nine Energy Service are associated (or correlated) with The9. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of The9 Ltd ADR has no effect on the direction of Nine Energy i.e., Nine Energy and The9 go up and down completely randomly.
Pair Corralation between Nine Energy and The9
Given the investment horizon of 90 days Nine Energy Service is expected to generate 1.44 times more return on investment than The9. However, Nine Energy is 1.44 times more volatile than The9 Ltd ADR. It trades about 0.36 of its potential returns per unit of risk. The9 Ltd ADR is currently generating about 0.47 per unit of risk. If you would invest 96.00 in Nine Energy Service on September 1, 2024 and sell it today you would earn a total of 79.00 from holding Nine Energy Service or generate 82.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nine Energy Service vs. The9 Ltd ADR
Performance |
| Timeline |
| Nine Energy Service |
| The9 Ltd ADR |
Nine Energy and The9 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nine Energy and The9
The main advantage of trading using opposite Nine Energy and The9 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nine Energy position performs unexpectedly, The9 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 The9 will offset losses from the drop in The9's long position.| Nine Energy vs. Enerflex | Nine Energy vs. Now Inc | Nine Energy vs. Bristow Group | Nine Energy vs. Helix Energy Solutions |
| The9 vs. Atari SA | The9 vs. Victory Square Technologies | The9 vs. Motorsport Gaming Us | The9 vs. Alpha Esports Tech |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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