Correlation Between BORR DRILLING and TUI AG

Can any of the company-specific risk be diversified away by investing in both BORR DRILLING and TUI AG 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 TUI AG 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 TUI AG, you can compare the effects of market volatilities on BORR DRILLING and TUI AG 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 TUI AG. Check out your portfolio center. Please also check ongoing floating volatility patterns of BORR DRILLING and TUI AG.

Diversification Opportunities for BORR DRILLING and TUI AG

0.71

Correlation Coefficient

BORR DRILLING  TUI AG

Poor diversification

The 3 months correlation between BORR and TUI is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding BORR DRILLING NEW and TUI AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TUI AG 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 TUI AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TUI AG has no effect on the direction of BORR DRILLING i.e., BORR DRILLING and TUI AG go up and down completely randomly.

Pair Corralation between BORR DRILLING and TUI AG

Assuming the 90 days horizon BORR DRILLING NEW is expected to under-perform the TUI AG. In addition to that, BORR DRILLING is 1.24 times more volatile than TUI AG. It trades about -0.17 of its total potential returns per unit of risk. TUI AG is currently generating about -0.11 per unit of volatility. If you would invest  835.00  in TUI AG on December 29, 2024 and sell it today you would lose (177.00) from holding TUI AG or give up 21.2% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.44%
Values	Daily Returns

BORR DRILLING NEW  vs.  TUI AG

BORR DRILLING NEW

Risk-Adjusted Performance

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 April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

TUI AG

Risk-Adjusted Performance

Very Weak

Over the last 90 days TUI AG has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with BORR DRILLING and TUI AG

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

The idea behind BORR DRILLING NEW and TUI AG 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.