Correlation Between GLOBUS MEDICAL-A and BW OFFSHORE

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

By analyzing existing cross correlation between GLOBUS MEDICAL A and BW OFFSHORE LTD, you can compare the effects of market volatilities on GLOBUS MEDICAL-A 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 GLOBUS MEDICAL-A with a short position of BW OFFSHORE. Check out your portfolio center. Please also check ongoing floating volatility patterns of GLOBUS MEDICAL-A and BW OFFSHORE.

Diversification Opportunities for GLOBUS MEDICAL-A and BW OFFSHORE

-0.55

Correlation Coefficient

GLOBUS MEDICAL-A  BW OFFSHORE

Excellent diversification

The 3 months correlation between GLOBUS and XY81 is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding GLOBUS MEDICAL A and BW OFFSHORE LTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BW OFFSHORE LTD and GLOBUS MEDICAL-A 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 GLOBUS MEDICAL A 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 LTD has no effect on the direction of GLOBUS MEDICAL-A i.e., GLOBUS MEDICAL-A and BW OFFSHORE go up and down completely randomly.

Pair Corralation between GLOBUS MEDICAL-A and BW OFFSHORE

Assuming the 90 days trading horizon GLOBUS MEDICAL-A is expected to generate 1.26 times less return on investment than BW OFFSHORE. But when comparing it to its historical volatility, GLOBUS MEDICAL A is 1.17 times less risky than BW OFFSHORE. It trades about 0.03 of its potential returns per unit of risk. BW OFFSHORE LTD is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  195.00  in BW OFFSHORE LTD on October 11, 2024 and sell it today you would earn a total of  70.00  from holding BW OFFSHORE LTD or generate 35.9% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

GLOBUS MEDICAL A  vs.  BW OFFSHORE LTD

GLOBUS MEDICAL A

Risk-Adjusted Performance

16 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in GLOBUS MEDICAL A are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, GLOBUS MEDICAL-A exhibited solid returns over the last few months and may actually be approaching a breakup point.

BW OFFSHORE LTD

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in BW OFFSHORE LTD are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, BW OFFSHORE is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with GLOBUS MEDICAL-A and BW OFFSHORE

The main advantage of trading using opposite GLOBUS MEDICAL-A and BW OFFSHORE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GLOBUS MEDICAL-A 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 GLOBUS MEDICAL A and BW OFFSHORE LTD 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.