Correlation Between BW Offshore and RadNet

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

Diversification Opportunities for BW Offshore and RadNet

0.37

Correlation Coefficient

BW Offshore  RadNet

Weak diversification

The 3 months correlation between BWOFY and RadNet is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding BW Offshore Limited and RadNet Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RadNet 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 RadNet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RadNet Inc has no effect on the direction of BW Offshore i.e., BW Offshore and RadNet go up and down completely randomly.

Pair Corralation between BW Offshore and RadNet

Assuming the 90 days horizon BW Offshore Limited is expected to under-perform the RadNet. But the pink sheet apears to be less risky and, when comparing its historical volatility, BW Offshore Limited is 2.31 times less risky than RadNet. The pink sheet trades about -0.12 of its potential returns per unit of risk. The RadNet Inc is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  6,709  in RadNet Inc on October 26, 2024 and sell it today you would lose (301.00) from holding RadNet Inc or give up 4.49% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.33%
Values	Daily Returns

BW Offshore Limited  vs.  RadNet 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 latest fragile performance, the Stock's technical and fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

RadNet Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days RadNet Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, RadNet is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with BW Offshore and RadNet

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

The idea behind BW Offshore Limited and RadNet 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.

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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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.