Correlation Between Corporacion America and BW Offshore

Can any of the company-specific risk be diversified away by investing in both Corporacion America and BW Offshore 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 Corporacion America and BW Offshore into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Corporacion America Airports and BW Offshore Limited, you can compare the effects of market volatilities on Corporacion America and BW Offshore 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 Corporacion America with a short position of BW Offshore. Check out your portfolio center. Please also check ongoing floating volatility patterns of Corporacion America and BW Offshore.

Diversification Opportunities for Corporacion America and BW Offshore

0.45

Correlation Coefficient

Corporacion America  BW Offshore

Very weak diversification

The 3 months correlation between Corporacion and BWOFY is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Corporacion America Airports and BW Offshore Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BW Offshore Limited and Corporacion America 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 Corporacion America Airports are associated (or correlated) with BW Offshore. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BW Offshore Limited has no effect on the direction of Corporacion America i.e., Corporacion America and BW Offshore go up and down completely randomly.

Pair Corralation between Corporacion America and BW Offshore

Given the investment horizon of 90 days Corporacion America Airports is expected to generate 1.64 times more return on investment than BW Offshore. However, Corporacion America is 1.64 times more volatile than BW Offshore Limited. It trades about 0.08 of its potential returns per unit of risk. BW Offshore Limited is currently generating about 0.02 per unit of risk. If you would invest  924.00  in Corporacion America Airports on October 23, 2024 and sell it today you would earn a total of  1,018  from holding Corporacion America Airports or generate 110.23% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	84.24%
Values	Daily Returns

Corporacion America Airports  vs.  BW Offshore Limited

Corporacion America

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Corporacion America Airports are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Corporacion America may actually be approaching a critical reversion point that can send shares even higher in February 2025.

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.

Pair Trading with Corporacion America and BW Offshore

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

The idea behind Corporacion America Airports and BW Offshore Limited 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.