Correlation Between BW OFFSHORE and NEXON Co

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

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

Diversification Opportunities for BW OFFSHORE and NEXON Co

0.47

Correlation Coefficient

BW OFFSHORE  NEXON Co

Very weak diversification

The 3 months correlation between XY81 and NEXON is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding BW OFFSHORE LTD and NEXON Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NEXON Co and BW 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 BW OFFSHORE LTD are associated (or correlated) with NEXON Co. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NEXON Co has no effect on the direction of BW OFFSHORE i.e., BW OFFSHORE and NEXON Co go up and down completely randomly.

Pair Corralation between BW OFFSHORE and NEXON Co

Assuming the 90 days trading horizon BW OFFSHORE LTD is expected to generate 1.11 times more return on investment than NEXON Co. However, BW OFFSHORE is 1.11 times more volatile than NEXON Co. It trades about -0.03 of its potential returns per unit of risk. NEXON Co is currently generating about -0.12 per unit of risk. If you would invest  266.00  in BW OFFSHORE LTD on October 5, 2024 and sell it today you would lose (20.00) from holding BW OFFSHORE LTD or give up 7.52% of portfolio value over 90 days.

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

BW OFFSHORE LTD  vs.  NEXON Co

BW OFFSHORE LTD

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BW OFFSHORE LTD has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, BW OFFSHORE is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

NEXON Co

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NEXON Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with BW OFFSHORE and NEXON Co

The main advantage of trading using opposite BW OFFSHORE and NEXON Co positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BW OFFSHORE position performs unexpectedly, NEXON Co 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 NEXON Co will offset losses from the drop in NEXON Co's long position.

The idea behind BW OFFSHORE LTD and NEXON Co 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.