Correlation Between Core Laboratories and Equinor ASA

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

Diversification Opportunities for Core Laboratories and Equinor ASA

0.3
  Correlation Coefficient

Weak diversification

The 3 months correlation between Core Laboratories and Equinor is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Core Laboratories NV and Equinor ASA ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Equinor ASA ADR and Core Laboratories 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 Core Laboratories NV are associated (or correlated) with Equinor ASA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Equinor ASA ADR has no effect on the direction of Core Laboratories i.e., Core Laboratories and Equinor ASA go up and down completely randomly.

Pair Corralation between Core Laboratories and Equinor ASA

Considering the 90-day investment horizon Core Laboratories NV is expected to under-perform the Equinor ASA. In addition to that, Core Laboratories is 1.53 times more volatile than Equinor ASA ADR. It trades about -0.16 of its total potential returns per unit of risk. Equinor ASA ADR is currently generating about 0.12 per unit of volatility. If you would invest  3,402  in Equinor ASA ADR on May 14, 2022 and sell it today you would earn a total of  433.00  from holding Equinor ASA ADR or generate 12.73% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy97.67%
ValuesDaily Returns

Core Laboratories NV  vs.  Equinor ASA ADR

 Performance (%) 
       Timeline  
Core Laboratories 
Core Laboratories Performance
0 of 100
Over the last 90 days Core Laboratories NV has generated negative risk-adjusted returns adding no value to investors with long positions. Despite sluggish performance in the last few months, the Stock's essential indicators remain somewhat strong which may send shares a bit higher in September 2022. The current disturbance may also be a sign of long term up-swing for the company investors.

Core Laboratories Price Channel

Equinor ASA ADR 
Equinor Performance
7 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Equinor ASA ADR are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady basic indicators, Equinor ASA reported solid returns over the last few months and may actually be approaching a breakup point.

Equinor Price Channel

Core Laboratories and Equinor ASA Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Core Laboratories and Equinor ASA

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

Core Laboratories NV

Pair trading matchups for Core Laboratories

The idea behind Core Laboratories NV and Equinor ASA ADR 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.

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