Correlation Between Havila Shipping and BW Offshore

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

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

Diversification Opportunities for Havila Shipping and BW Offshore

-0.18

Correlation Coefficient

Havila Shipping  BW Offshore

Good diversification

The 3 months correlation between Havila and BWO is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Havila Shipping ASA and BW Offshore in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BW Offshore and Havila Shipping 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 Havila Shipping ASA 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 has no effect on the direction of Havila Shipping i.e., Havila Shipping and BW Offshore go up and down completely randomly.

Pair Corralation between Havila Shipping and BW Offshore

Assuming the 90 days trading horizon Havila Shipping ASA is expected to under-perform the BW Offshore. In addition to that, Havila Shipping is 1.6 times more volatile than BW Offshore. It trades about -0.08 of its total potential returns per unit of risk. BW Offshore is currently generating about 0.02 per unit of volatility. If you would invest  2,759  in BW Offshore on September 2, 2024 and sell it today you would earn a total of  31.00  from holding BW Offshore or generate 1.12% return on investment over 90 days.

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

Havila Shipping ASA  vs.  BW Offshore

Havila Shipping ASA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Havila Shipping ASA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's essential indicators remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

BW Offshore

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in BW Offshore are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, BW Offshore is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Havila Shipping and BW Offshore

The main advantage of trading using opposite Havila Shipping and BW Offshore positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Havila Shipping 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 Havila Shipping ASA and BW Offshore 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .