Correlation Between BORR DRILLING and Hemisphere Energy

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

By analyzing existing cross correlation between BORR DRILLING NEW and Hemisphere Energy Corp, you can compare the effects of market volatilities on BORR DRILLING and Hemisphere Energy 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 BORR DRILLING with a short position of Hemisphere Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of BORR DRILLING and Hemisphere Energy.

Diversification Opportunities for BORR DRILLING and Hemisphere Energy

-0.35

Correlation Coefficient

BORR DRILLING  Hemisphere Energy

Very good diversification

The 3 months correlation between BORR and Hemisphere is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding BORR DRILLING NEW and Hemisphere Energy Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hemisphere Energy Corp and BORR DRILLING 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 BORR DRILLING NEW are associated (or correlated) with Hemisphere Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hemisphere Energy Corp has no effect on the direction of BORR DRILLING i.e., BORR DRILLING and Hemisphere Energy go up and down completely randomly.

Pair Corralation between BORR DRILLING and Hemisphere Energy

Assuming the 90 days horizon BORR DRILLING NEW is expected to under-perform the Hemisphere Energy. In addition to that, BORR DRILLING is 1.65 times more volatile than Hemisphere Energy Corp. It trades about -0.1 of its total potential returns per unit of risk. Hemisphere Energy Corp is currently generating about 0.1 per unit of volatility. If you would invest  99.00  in Hemisphere Energy Corp on September 3, 2024 and sell it today you would earn a total of  25.00  from holding Hemisphere Energy Corp or generate 25.25% return on investment over 90 days.

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

BORR DRILLING NEW  vs.  Hemisphere Energy Corp

BORR DRILLING NEW

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BORR DRILLING NEW has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Hemisphere Energy Corp

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Hemisphere Energy Corp are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Hemisphere Energy unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with BORR DRILLING and Hemisphere Energy

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

The idea behind BORR DRILLING NEW and Hemisphere Energy Corp 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.