Correlation Between Sabre Corpo and BW Offshore

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

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

Diversification Opportunities for Sabre Corpo and BW Offshore

0.08

Correlation Coefficient

Sabre Corpo  BW Offshore

Significant diversification

The 3 months correlation between Sabre and BWOFY is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Sabre Corpo 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 Sabre Corpo 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 Sabre Corpo 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 Sabre Corpo i.e., Sabre Corpo and BW Offshore go up and down completely randomly.

Pair Corralation between Sabre Corpo and BW Offshore

Given the investment horizon of 90 days Sabre Corpo is expected to generate 3.13 times more return on investment than BW Offshore. However, Sabre Corpo is 3.13 times more volatile than BW Offshore Limited. It trades about 0.02 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  392.00  in Sabre Corpo on December 8, 2024 and sell it today you would lose (3.00) from holding Sabre Corpo or give up 0.77% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	90.89%
Values	Daily Returns

Sabre Corpo  vs.  BW Offshore Limited

Sabre Corpo

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Sabre Corpo are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak fundamental drivers, Sabre Corpo may actually be approaching a critical reversion point that can send shares even higher in April 2025.

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 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 Sabre Corpo and BW Offshore

The main advantage of trading using opposite Sabre Corpo and BW Offshore positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sabre Corpo 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 Sabre Corpo 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.