Correlation Between Babcock Wilcox and Samfine Creation

Can any of the company-specific risk be diversified away by investing in both Babcock Wilcox and Samfine Creation 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 Babcock Wilcox and Samfine Creation into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Babcock Wilcox Enterprises and Samfine Creation Holdings, you can compare the effects of market volatilities on Babcock Wilcox and Samfine Creation 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 Babcock Wilcox with a short position of Samfine Creation. Check out your portfolio center. Please also check ongoing floating volatility patterns of Babcock Wilcox and Samfine Creation.

Diversification Opportunities for Babcock Wilcox and Samfine Creation

0.75

Correlation Coefficient

Babcock Wilcox  Samfine Creation

Poor diversification

The 3 months correlation between Babcock and Samfine is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Babcock Wilcox Enterprises and Samfine Creation Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Samfine Creation Holdings and Babcock Wilcox 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 Babcock Wilcox Enterprises are associated (or correlated) with Samfine Creation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Samfine Creation Holdings has no effect on the direction of Babcock Wilcox i.e., Babcock Wilcox and Samfine Creation go up and down completely randomly.

Pair Corralation between Babcock Wilcox and Samfine Creation

Allowing for the 90-day total investment horizon Babcock Wilcox Enterprises is expected to under-perform the Samfine Creation. But the stock apears to be less risky and, when comparing its historical volatility, Babcock Wilcox Enterprises is 1.86 times less risky than Samfine Creation. The stock trades about -0.27 of its potential returns per unit of risk. The Samfine Creation Holdings is currently generating about -0.07 of returns per unit of risk over similar time horizon. If you would invest  117.00  in Samfine Creation Holdings on December 29, 2024 and sell it today you would lose (50.00) from holding Samfine Creation Holdings or give up 42.74% of portfolio value over 90 days.

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

Babcock Wilcox Enterprises  vs.  Samfine Creation Holdings

Babcock Wilcox Enter

Risk-Adjusted Performance

Very Weak

Over the last 90 days Babcock Wilcox Enterprises has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in April 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Samfine Creation Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days Samfine Creation Holdings 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 technical 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.

Pair Trading with Babcock Wilcox and Samfine Creation

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

The idea behind Babcock Wilcox Enterprises and Samfine Creation Holdings 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.