Correlation Between RPC and Nine Energy

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

By analyzing existing cross correlation between RPC Inc and Nine Energy Service, you can compare the effects of market volatilities on RPC and Nine Energy 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 RPC with a short position of Nine Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of RPC and Nine Energy.

Diversification Opportunities for RPC and Nine Energy

0.54

Correlation Coefficient

RPC  Nine Energy

Very weak diversification

The 3 months correlation between RPC and Nine is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding RPC Inc and Nine Energy Service in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nine Energy Service and RPC 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 RPC Inc are associated (or correlated) with Nine Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nine Energy Service has no effect on the direction of RPC i.e., RPC and Nine Energy go up and down completely randomly.

Pair Corralation between RPC and Nine Energy

Considering the 90-day investment horizon RPC Inc is expected to generate 0.52 times more return on investment than Nine Energy. However, RPC Inc is 1.93 times less risky than Nine Energy. It trades about -0.01 of its potential returns per unit of risk. Nine Energy Service is currently generating about -0.06 per unit of risk. If you would invest  751.00  in RPC Inc on August 3, 2024 and sell it today you would lose (183.00) from holding RPC Inc or give up 24.37% of portfolio value over 90 days.

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

RPC Inc  vs.  Nine Energy Service

RPC Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days RPC Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest conflicting performance, the Stock's technical and fundamental indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

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 abnormal performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in December 2024. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with RPC and Nine Energy

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

The idea behind RPC Inc and Nine Energy Service 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.