Correlation Between BW Offshore and Globalink Investment

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

Diversification Opportunities for BW Offshore and Globalink Investment

0.51

Correlation Coefficient

BW Offshore  Globalink Investment

Very weak diversification

The 3 months correlation between BWOFY and Globalink is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding BW Offshore Limited and Globalink Investment Unit in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Globalink Investment Unit 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 Globalink Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Globalink Investment Unit has no effect on the direction of BW Offshore i.e., BW Offshore and Globalink Investment go up and down completely randomly.

Pair Corralation between BW Offshore and Globalink Investment

Assuming the 90 days horizon BW Offshore is expected to generate 2.9 times less return on investment than Globalink Investment. In addition to that, BW Offshore is 3.48 times more volatile than Globalink Investment Unit. It trades about 0.0 of its total potential returns per unit of risk. Globalink Investment Unit is currently generating about 0.03 per unit of volatility. If you would invest  1,180  in Globalink Investment Unit on September 19, 2024 and sell it today you would earn a total of  12.00  from holding Globalink Investment Unit or generate 1.02% return on investment over 90 days.

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

BW Offshore Limited  vs.  Globalink Investment Unit

BW Offshore Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BW Offshore Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong technical and fundamental indicators, BW Offshore is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Globalink Investment Unit

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Globalink Investment Unit are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable forward indicators, Globalink Investment is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with BW Offshore and Globalink Investment

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

The idea behind BW Offshore Limited and Globalink Investment Unit 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 CEOs Directory module to screen CEOs from public companies around the world.