Correlation Between BW Offshore and Marine Products

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

Diversification Opportunities for BW Offshore and Marine Products

0.0

Correlation Coefficient

BW Offshore  Marine Products

Pay attention - limited upside

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

Pair Corralation between BW Offshore and Marine Products

Assuming the 90 days horizon BW Offshore Limited is expected to under-perform the Marine Products. But the pink sheet apears to be less risky and, when comparing its historical volatility, BW Offshore Limited is 1.44 times less risky than Marine Products. The pink sheet trades about -0.04 of its potential returns per unit of risk. The Marine Products is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  886.00  in Marine Products on December 28, 2024 and sell it today you would lose (32.00) from holding Marine Products or give up 3.61% of portfolio value over 90 days.

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

BW Offshore Limited  vs.  Marine Products

BW Offshore Limited

Risk-Adjusted Performance

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.

Marine Products

Risk-Adjusted Performance

Very Weak

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

Pair Trading with BW Offshore and Marine Products

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

The idea behind BW Offshore Limited and Marine Products 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.