Correlation Between Mulberry Group and BW Offshore

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

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

Diversification Opportunities for Mulberry Group and BW Offshore

0.57

Correlation Coefficient

Mulberry Group  BW Offshore

Very weak diversification

The 3 months correlation between Mulberry and 0RKH is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Mulberry Group PLC and BW Offshore in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BW Offshore and Mulberry Group 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 Mulberry Group PLC 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 Mulberry Group i.e., Mulberry Group and BW Offshore go up and down completely randomly.

Pair Corralation between Mulberry Group and BW Offshore

Assuming the 90 days trading horizon Mulberry Group PLC is expected to under-perform the BW Offshore. In addition to that, Mulberry Group is 1.47 times more volatile than BW Offshore. It trades about -0.09 of its total potential returns per unit of risk. BW Offshore is currently generating about -0.01 per unit of volatility. If you would invest  3,207  in BW Offshore on October 14, 2024 and sell it today you would lose (104.00) from holding BW Offshore or give up 3.24% of portfolio value over 90 days.

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

Mulberry Group PLC  vs.  BW Offshore

Mulberry Group PLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mulberry Group PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

BW Offshore

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BW Offshore has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, BW Offshore 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 Mulberry Group and BW Offshore

The main advantage of trading using opposite Mulberry Group and BW Offshore positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mulberry Group 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 Mulberry Group PLC 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.

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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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.