Correlation Between BW Offshore and Catalyst Media

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

By analyzing existing cross correlation between BW Offshore and Catalyst Media Group, you can compare the effects of market volatilities on BW Offshore and Catalyst Media 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 Catalyst Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of BW Offshore and Catalyst Media.

Diversification Opportunities for BW Offshore and Catalyst Media

0.33

Correlation Coefficient

BW Offshore  Catalyst Media

Weak diversification

The 3 months correlation between 0RKH and Catalyst is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding BW Offshore and Catalyst Media Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Catalyst Media Group 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 Catalyst Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Catalyst Media Group has no effect on the direction of BW Offshore i.e., BW Offshore and Catalyst Media go up and down completely randomly.

Pair Corralation between BW Offshore and Catalyst Media

Assuming the 90 days trading horizon BW Offshore is expected to generate 1.42 times more return on investment than Catalyst Media. However, BW Offshore is 1.42 times more volatile than Catalyst Media Group. It trades about 0.28 of its potential returns per unit of risk. Catalyst Media Group is currently generating about -0.32 per unit of risk. If you would invest  2,793  in BW Offshore on October 5, 2024 and sell it today you would earn a total of  310.00  from holding BW Offshore or generate 11.1% 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.  Catalyst Media Group

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.

Catalyst Media Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Catalyst Media Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with BW Offshore and Catalyst Media

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

The idea behind BW Offshore and Catalyst Media Group 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.