Correlation Between Batm Advanced and BW Offshore

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

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

Diversification Opportunities for Batm Advanced and BW Offshore

0.06

Correlation Coefficient

Batm Advanced  BW Offshore

Significant diversification

The 3 months correlation between Batm and 0RKH is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Batm Advanced Communications and BW Offshore in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BW Offshore and Batm Advanced 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 Batm Advanced Communications 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 has no effect on the direction of Batm Advanced i.e., Batm Advanced and BW Offshore go up and down completely randomly.

Pair Corralation between Batm Advanced and BW Offshore

Assuming the 90 days trading horizon Batm Advanced Communications is expected to generate 0.75 times more return on investment than BW Offshore. However, Batm Advanced Communications is 1.33 times less risky than BW Offshore. It trades about 0.01 of its potential returns per unit of risk. BW Offshore is currently generating about 0.01 per unit of risk. If you would invest  1,720  in Batm Advanced Communications on December 4, 2024 and sell it today you would earn a total of  10.00  from holding Batm Advanced Communications or generate 0.58% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.39%
Values	Daily Returns

Batm Advanced Communications  vs.  BW Offshore

Batm Advanced Commun

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Batm Advanced Communications are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Batm Advanced is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

BW Offshore

Risk-Adjusted Performance

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.

Pair Trading with Batm Advanced and BW Offshore

The main advantage of trading using opposite Batm Advanced and BW Offshore positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Batm Advanced 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 Batm Advanced Communications and BW Offshore 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.