Correlation Between BW Offshore and Joint Stock

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

Diversification Opportunities for BW Offshore and Joint Stock

-0.2

Correlation Coefficient

BW Offshore  Joint Stock

Good diversification

The 3 months correlation between BWOFY and Joint is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding BW Offshore Limited and Joint Stock in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Joint Stock 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 Joint Stock. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Joint Stock has no effect on the direction of BW Offshore i.e., BW Offshore and Joint Stock go up and down completely randomly.

Pair Corralation between BW Offshore and Joint Stock

Assuming the 90 days horizon BW Offshore Limited is expected to generate 0.3 times more return on investment than Joint Stock. However, BW Offshore Limited is 3.35 times less risky than Joint Stock. It trades about 0.29 of its potential returns per unit of risk. Joint Stock is currently generating about -0.14 per unit of risk. If you would invest  538.00  in BW Offshore Limited on September 20, 2024 and sell it today you would earn a total of  17.00  from holding BW Offshore Limited or generate 3.16% return on investment over 90 days.

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

BW Offshore Limited  vs.  Joint Stock

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.

Joint Stock

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Joint Stock are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent basic indicators, Joint Stock may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with BW Offshore and Joint Stock

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

The idea behind BW Offshore Limited and Joint Stock 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.