Correlation Between Gaztransport and BW Offshore

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

By analyzing existing cross correlation between Gaztransport et Technigaz and BW Offshore, you can compare the effects of market volatilities on Gaztransport and BW Offshore 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 Gaztransport with a short position of BW Offshore. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gaztransport and BW Offshore.

Diversification Opportunities for Gaztransport and BW Offshore

-0.17

Correlation Coefficient

Gaztransport  BW Offshore

Good diversification

The 3 months correlation between Gaztransport and 0RKH is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Gaztransport et Technigaz and BW Offshore in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BW Offshore and Gaztransport 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 Gaztransport et Technigaz are associated (or correlated) with BW Offshore. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BW Offshore has no effect on the direction of Gaztransport i.e., Gaztransport and BW Offshore go up and down completely randomly.

Pair Corralation between Gaztransport and BW Offshore

Assuming the 90 days trading horizon Gaztransport is expected to generate 1.21 times less return on investment than BW Offshore. But when comparing it to its historical volatility, Gaztransport et Technigaz is 1.65 times less risky than BW Offshore. It trades about 0.05 of its potential returns per unit of risk. BW Offshore is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  1,999  in BW Offshore on September 19, 2024 and sell it today you would earn a total of  671.00  from holding BW Offshore or generate 33.57% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.6%
Values	Daily Returns

Gaztransport et Technigaz  vs.  BW Offshore

Gaztransport et Technigaz

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Gaztransport et Technigaz are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Gaztransport is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

BW Offshore

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BW Offshore has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, BW Offshore is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Gaztransport and BW Offshore

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

The idea behind Gaztransport et Technigaz and BW Offshore 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.