Correlation Between BW Offshore and Chrysalis Investments

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

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

Diversification Opportunities for BW Offshore and Chrysalis Investments

0.22

Correlation Coefficient

BW Offshore  Chrysalis Investments

Modest diversification

The 3 months correlation between 0RKH and Chrysalis is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding BW Offshore and Chrysalis Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chrysalis Investments and BW Offshore 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 BW Offshore are associated (or correlated) with Chrysalis Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chrysalis Investments has no effect on the direction of BW Offshore i.e., BW Offshore and Chrysalis Investments go up and down completely randomly.

Pair Corralation between BW Offshore and Chrysalis Investments

Assuming the 90 days trading horizon BW Offshore is expected to generate 1.66 times more return on investment than Chrysalis Investments. However, BW Offshore is 1.66 times more volatile than Chrysalis Investments. It trades about 0.09 of its potential returns per unit of risk. Chrysalis Investments is currently generating about -0.09 per unit of risk. If you would invest  2,624  in BW Offshore on December 22, 2024 and sell it today you would earn a total of  381.00  from holding BW Offshore or generate 14.52% return on investment over 90 days.

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

BW Offshore  vs.  Chrysalis Investments

BW Offshore

Risk-Adjusted Performance

OK

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

Chrysalis Investments

Risk-Adjusted Performance

Very Weak

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

Pair Trading with BW Offshore and Chrysalis Investments

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

The idea behind BW Offshore and Chrysalis Investments 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.