Correlation Between Nabors Energy and NetEase

Can any of the company-specific risk be diversified away by investing in both Nabors Energy and NetEase 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 NetEase 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 NetEase, you can compare the effects of market volatilities on Nabors Energy and NetEase 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 NetEase. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nabors Energy and NetEase.

Diversification Opportunities for Nabors Energy and NetEase

-0.4

Correlation Coefficient

Nabors Energy  NetEase

Very good diversification

The 3 months correlation between Nabors and NetEase is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Nabors Energy Transition and NetEase in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NetEase 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 NetEase. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NetEase has no effect on the direction of Nabors Energy i.e., Nabors Energy and NetEase go up and down completely randomly.

Pair Corralation between Nabors Energy and NetEase

Assuming the 90 days horizon Nabors Energy Transition is expected to generate 10.49 times more return on investment than NetEase. However, Nabors Energy is 10.49 times more volatile than NetEase. It trades about 0.04 of its potential returns per unit of risk. NetEase is currently generating about 0.15 per unit of risk. If you would invest  50.00  in Nabors Energy Transition on May 16, 2025 and sell it today you would lose (19.00) from holding Nabors Energy Transition or give up 38.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	83.61%
Values	Daily Returns

Nabors Energy Transition  vs.  NetEase

Nabors Energy Transition

Risk-Adjusted Performance

Soft

Compared to the overall equity markets, risk-adjusted returns on investments in Nabors Energy Transition are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain fundamental indicators, Nabors Energy showed solid returns over the last few months and may actually be approaching a breakup point.

NetEase

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in NetEase are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively inconsistent technical and fundamental indicators, NetEase unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Nabors Energy and NetEase

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

The idea behind Nabors Energy Transition and NetEase 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.