Correlation Between ARDAGH METAL and BW OFFSHORE

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

By analyzing existing cross correlation between ARDAGH METAL PACDL 0001 and BW OFFSHORE LTD, you can compare the effects of market volatilities on ARDAGH METAL 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 ARDAGH METAL with a short position of BW OFFSHORE. Check out your portfolio center. Please also check ongoing floating volatility patterns of ARDAGH METAL and BW OFFSHORE.

Diversification Opportunities for ARDAGH METAL and BW OFFSHORE

0.42

Correlation Coefficient

ARDAGH METAL  BW OFFSHORE

Very weak diversification

The 3 months correlation between ARDAGH and XY81 is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding ARDAGH METAL PACDL 0001 and BW OFFSHORE LTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BW OFFSHORE LTD and ARDAGH METAL 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 ARDAGH METAL PACDL 0001 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 LTD has no effect on the direction of ARDAGH METAL i.e., ARDAGH METAL and BW OFFSHORE go up and down completely randomly.

Pair Corralation between ARDAGH METAL and BW OFFSHORE

Assuming the 90 days horizon ARDAGH METAL is expected to generate 2.82 times less return on investment than BW OFFSHORE. In addition to that, ARDAGH METAL is 1.59 times more volatile than BW OFFSHORE LTD. It trades about 0.01 of its total potential returns per unit of risk. BW OFFSHORE LTD is currently generating about 0.03 per unit of volatility. If you would invest  187.00  in BW OFFSHORE LTD on September 20, 2024 and sell it today you would earn a total of  44.00  from holding BW OFFSHORE LTD or generate 23.53% return on investment over 90 days.

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

ARDAGH METAL PACDL 0001  vs.  BW OFFSHORE LTD

ARDAGH METAL PACDL

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ARDAGH METAL PACDL 0001 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, ARDAGH METAL is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

BW OFFSHORE LTD

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in BW OFFSHORE LTD are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, BW OFFSHORE is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with ARDAGH METAL and BW OFFSHORE

The main advantage of trading using opposite ARDAGH METAL and BW OFFSHORE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ARDAGH METAL 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 ARDAGH METAL PACDL 0001 and BW OFFSHORE LTD 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.