Correlation Between 12527GAH6 and BW Offshore

Can any of the company-specific risk be diversified away by investing in both 12527GAH6 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 12527GAH6 and BW Offshore into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between US12527GAH65 and BW Offshore Limited, you can compare the effects of market volatilities on 12527GAH6 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 12527GAH6 with a short position of BW Offshore. Check out your portfolio center. Please also check ongoing floating volatility patterns of 12527GAH6 and BW Offshore.

Diversification Opportunities for 12527GAH6 and BW Offshore

0.33

Correlation Coefficient

12527GAH6  BW Offshore

Weak diversification

The 3 months correlation between 12527GAH6 and BWOFY is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding US12527GAH65 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 12527GAH6 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 US12527GAH65 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 12527GAH6 i.e., 12527GAH6 and BW Offshore go up and down completely randomly.

Pair Corralation between 12527GAH6 and BW Offshore

Assuming the 90 days trading horizon US12527GAH65 is expected to generate 0.11 times more return on investment than BW Offshore. However, US12527GAH65 is 9.0 times less risky than BW Offshore. It trades about 0.09 of its potential returns per unit of risk. BW Offshore Limited is currently generating about -0.13 per unit of risk. If you would invest  9,901  in US12527GAH65 on December 1, 2024 and sell it today you would earn a total of  40.00  from holding US12527GAH65 or generate 0.4% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	51.67%
Values	Daily Returns

US12527GAH65  vs.  BW Offshore Limited

US12527GAH65

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in US12527GAH65 are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, 12527GAH6 is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

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 inconsistent 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 12527GAH6 and BW Offshore

The main advantage of trading using opposite 12527GAH6 and BW Offshore positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 12527GAH6 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 US12527GAH65 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.