Correlation Between Nine Energy and Kodiak Gas

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

Diversification Opportunities for Nine Energy and Kodiak Gas

-0.35

Correlation Coefficient

Nine Energy  Kodiak Gas

Very good diversification

The 3 months correlation between Nine and Kodiak is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Nine Energy Service and Kodiak Gas Services, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kodiak Gas Services, 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 Kodiak Gas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kodiak Gas Services, has no effect on the direction of Nine Energy i.e., Nine Energy and Kodiak Gas go up and down completely randomly.

Pair Corralation between Nine Energy and Kodiak Gas

Given the investment horizon of 90 days Nine Energy Service is expected to under-perform the Kodiak Gas. In addition to that, Nine Energy is 3.75 times more volatile than Kodiak Gas Services,. It trades about -0.04 of its total potential returns per unit of risk. Kodiak Gas Services, is currently generating about 0.21 per unit of volatility. If you would invest  2,900  in Kodiak Gas Services, on August 1, 2024 and sell it today you would earn a total of  281.00  from holding Kodiak Gas Services, or generate 9.69% return on investment over 90 days.

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

Nine Energy Service  vs.  Kodiak Gas Services,

Nine Energy Service

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nine Energy Service has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in November 2024. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Kodiak Gas Services,

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Kodiak Gas Services, are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively abnormal technical and fundamental indicators, Kodiak Gas unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Nine Energy and Kodiak Gas

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

The idea behind Nine Energy Service and Kodiak Gas Services, 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.