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

-0.66

Correlation Coefficient

Core Laboratories  Recon Technology

Excellent diversification

The 3 months correlation between Core and Recon is -0.66. 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 under-perform the Recon Technology. But the stock apears to be less risky and, when comparing its historical volatility, Core Laboratories NV is 1.68 times less risky than Recon Technology. The stock trades about -0.07 of its potential returns per unit of risk. The Recon Technology is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  159.00  in Recon Technology on March 18, 2025 and sell it today you would earn a total of  120.00  from holding Recon Technology or generate 75.47% return on investment over 90 days.

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

Core Laboratories NV  vs.  Recon Technology

Core Laboratories

Risk-Adjusted Performance

Very Weak

Over the last 90 days Core Laboratories NV has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's essential indicators remain somewhat strong which may send shares a bit higher in July 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Recon Technology

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Recon Technology are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of very fragile basic indicators, Recon Technology displayed solid returns over the last few months and may actually be approaching a breakup point.

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.

The idea behind Core Laboratories NV and Recon Technology 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.