Correlation Between Major Drilling and Neuronetics

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

By analyzing existing cross correlation between Major Drilling Group and Neuronetics, you can compare the effects of market volatilities on Major Drilling and Neuronetics 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 Major Drilling with a short position of Neuronetics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Major Drilling and Neuronetics.

Diversification Opportunities for Major Drilling and Neuronetics

0.0

Correlation Coefficient

Major Drilling  Neuronetics

Pay attention - limited upside

The 3 months correlation between Major and Neuronetics is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Major Drilling Group and Neuronetics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Neuronetics and Major Drilling 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 Major Drilling Group are associated (or correlated) with Neuronetics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Neuronetics has no effect on the direction of Major Drilling i.e., Major Drilling and Neuronetics go up and down completely randomly.

Pair Corralation between Major Drilling and Neuronetics

Assuming the 90 days horizon Major Drilling is expected to generate 15.66 times less return on investment than Neuronetics. But when comparing it to its historical volatility, Major Drilling Group is 3.07 times less risky than Neuronetics. It trades about 0.03 of its potential returns per unit of risk. Neuronetics is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  109.00  in Neuronetics on February 1, 2025 and sell it today you would earn a total of  337.00  from holding Neuronetics or generate 309.17% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Major Drilling Group  vs.  Neuronetics

Major Drilling Group

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Major Drilling Group are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile essential indicators, Major Drilling reported solid returns over the last few months and may actually be approaching a breakup point.

Neuronetics

Risk-Adjusted Performance

OK

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

Pair Trading with Major Drilling and Neuronetics

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

The idea behind Major Drilling Group and Neuronetics 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.

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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.