Correlation Between Newpark Resources and CJ Energy

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Can any of the company-specific risk be diversified away by investing in both Newpark Resources and CJ 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 Newpark Resources and CJ Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Newpark Resources and CJ Energy Services, you can compare the effects of market volatilities on Newpark Resources and CJ 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 Newpark Resources with a short position of CJ Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Newpark Resources and CJ Energy.

Diversification Opportunities for Newpark Resources and CJ Energy

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  Correlation Coefficient

Pay attention - limited upside

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

Pair Corralation between Newpark Resources and CJ Energy

If you would invest  642.00  in Newpark Resources on December 29, 2023 and sell it today you would earn a total of  77.00  from holding Newpark Resources or generate 11.99% return on investment over 90 days.
Time Period3 Months [change]
DirectionFlat 
StrengthInsignificant
Accuracy0.0%
ValuesDaily Returns

Newpark Resources  vs.  CJ Energy Services

 Performance 
       Timeline  
Newpark Resources 

Risk-Adjusted Performance

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Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Newpark Resources are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Newpark Resources may actually be approaching a critical reversion point that can send shares even higher in April 2024.
CJ Energy Services 

Risk-Adjusted Performance

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Low
 
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Very Weak
Over the last 90 days CJ Energy Services has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively steady forward-looking indicators, CJ Energy is not utilizing all of its potentials. The recent stock price chaos, may contribute to medium-term losses for the stakeholders.

Newpark Resources and CJ Energy Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Newpark Resources and CJ Energy

The main advantage of trading using opposite Newpark Resources and CJ Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Newpark Resources position performs unexpectedly, CJ 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 CJ Energy will offset losses from the drop in CJ Energy's long position.
The idea behind Newpark Resources and CJ Energy 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.
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.

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