Correlation Between WT OFFSHORE and BW OFFSHORE

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

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

Diversification Opportunities for WT OFFSHORE and BW OFFSHORE

0.48

Correlation Coefficient

WT OFFSHORE  BW OFFSHORE

Very weak diversification

The 3 months correlation between UWV and XY81 is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding WT OFFSHORE 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 WT OFFSHORE 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 WT OFFSHORE 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 WT OFFSHORE i.e., WT OFFSHORE and BW OFFSHORE go up and down completely randomly.

Pair Corralation between WT OFFSHORE and BW OFFSHORE

Assuming the 90 days trading horizon WT OFFSHORE is expected to generate 19.64 times less return on investment than BW OFFSHORE. In addition to that, WT OFFSHORE is 1.32 times more volatile than BW OFFSHORE LTD. It trades about 0.0 of its total potential returns per unit of risk. BW OFFSHORE LTD is currently generating about 0.07 per unit of volatility. If you would invest  209.00  in BW OFFSHORE LTD on September 12, 2024 and sell it today you would earn a total of  24.00  from holding BW OFFSHORE LTD or generate 11.48% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.46%
Values	Daily Returns

WT OFFSHORE  vs.  BW OFFSHORE LTD

WT OFFSHORE

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days WT OFFSHORE has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, WT OFFSHORE is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

BW OFFSHORE LTD

Risk-Adjusted Performance

5 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in BW OFFSHORE LTD are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, BW OFFSHORE reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with WT OFFSHORE and BW OFFSHORE

The main advantage of trading using opposite WT OFFSHORE and BW OFFSHORE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WT OFFSHORE 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 WT OFFSHORE 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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.