Correlation Between BW Offshore and Stardust Power

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

Diversification Opportunities for BW Offshore and Stardust Power

0.85

Correlation Coefficient

BW Offshore  Stardust Power

Very poor diversification

The 3 months correlation between BWOFY and Stardust is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding BW Offshore Limited and Stardust Power in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stardust Power 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 Stardust Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stardust Power has no effect on the direction of BW Offshore i.e., BW Offshore and Stardust Power go up and down completely randomly.

Pair Corralation between BW Offshore and Stardust Power

Assuming the 90 days horizon BW Offshore Limited is expected to generate 0.07 times more return on investment than Stardust Power. However, BW Offshore Limited is 14.26 times less risky than Stardust Power. It trades about -0.13 of its potential returns per unit of risk. Stardust Power is currently generating about -0.02 per unit of risk. If you would invest  555.00  in BW Offshore Limited on December 3, 2024 and sell it today you would lose (54.00) from holding BW Offshore Limited or give up 9.73% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	86.67%
Values	Daily Returns

BW Offshore Limited  vs.  Stardust Power

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 latest unsteady 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.

Stardust Power

Risk-Adjusted Performance

Very Weak

Over the last 90 days Stardust Power has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in April 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with BW Offshore and Stardust Power

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

The idea behind BW Offshore Limited and Stardust Power 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.