Correlation Between BW Offshore and Qualys

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

Diversification Opportunities for BW Offshore and Qualys

0.39

Correlation Coefficient

BW Offshore  Qualys

Weak diversification

The 3 months correlation between BWOFY and Qualys is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding BW Offshore Limited and Qualys Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Qualys Inc 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 Qualys. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Qualys Inc has no effect on the direction of BW Offshore i.e., BW Offshore and Qualys go up and down completely randomly.

Pair Corralation between BW Offshore and Qualys

Assuming the 90 days horizon BW Offshore Limited is expected to generate 0.18 times more return on investment than Qualys. However, BW Offshore Limited is 5.7 times less risky than Qualys. It trades about 0.22 of its potential returns per unit of risk. Qualys Inc is currently generating about -0.43 per unit of risk. If you would invest  550.00  in BW Offshore Limited on September 24, 2024 and sell it today you would earn a total of  5.00  from holding BW Offshore Limited or generate 0.91% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.24%
Values	Daily Returns

BW Offshore Limited  vs.  Qualys Inc

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 newest stock price disturbance, may contribute to short-term losses for the investors.

Qualys Inc

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Qualys Inc are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Qualys unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with BW Offshore and Qualys

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

The idea behind BW Offshore Limited and Qualys Inc 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.

Check out your portfolio center.

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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.