Correlation Between BW Offshore and PSI All

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

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

Diversification Opportunities for BW Offshore and PSI All

0.0

Correlation Coefficient

BW Offshore  PSI All

Pay attention - limited upside

The 3 months correlation between BWOFY and PSI is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding BW Offshore Limited and PSI All Share in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PSI All Share and BW Offshore 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 BW Offshore Limited are associated (or correlated) with PSI All. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PSI All Share has no effect on the direction of BW Offshore i.e., BW Offshore and PSI All go up and down completely randomly.

Pair Corralation between BW Offshore and PSI All

If you would invest  0.00  in PSI All Share on December 20, 2024 and sell it today you would earn a total of  0.00  from holding PSI All Share or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	1.69%
Values	Daily Returns

BW Offshore Limited  vs.  PSI All Share

Pair Trading with BW Offshore and PSI All

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

The idea behind BW Offshore Limited and PSI All Share 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.