Correlation Between Nabors Energy and RCL Foods

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

By analyzing existing cross correlation between Nabors Energy Transition and RCL Foods Limited, you can compare the effects of market volatilities on Nabors Energy and RCL Foods 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 Nabors Energy with a short position of RCL Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nabors Energy and RCL Foods.

Diversification Opportunities for Nabors Energy and RCL Foods

0.55

Correlation Coefficient

Nabors Energy  RCL Foods

Very weak diversification

The 3 months correlation between Nabors and RCL is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Nabors Energy Transition and RCL Foods Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RCL Foods Limited and Nabors 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 Nabors Energy Transition are associated (or correlated) with RCL Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RCL Foods Limited has no effect on the direction of Nabors Energy i.e., Nabors Energy and RCL Foods go up and down completely randomly.

Pair Corralation between Nabors Energy and RCL Foods

Given the investment horizon of 90 days Nabors Energy is expected to generate 8.75 times less return on investment than RCL Foods. But when comparing it to its historical volatility, Nabors Energy Transition is 9.16 times less risky than RCL Foods. It trades about 0.12 of its potential returns per unit of risk. RCL Foods Limited is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  47.00  in RCL Foods Limited on May 12, 2025 and sell it today you would earn a total of  10.00  from holding RCL Foods Limited or generate 21.28% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	96.92%
Values	Daily Returns

Nabors Energy Transition  vs.  RCL Foods Limited

Nabors Energy Transition

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in Nabors Energy Transition are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Nabors Energy is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

RCL Foods Limited

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in RCL Foods Limited are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly conflicting technical and fundamental indicators, RCL Foods reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Nabors Energy and RCL Foods

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

The idea behind Nabors Energy Transition and RCL Foods Limited 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.