Correlation Between BW OFFSHORE and ANDREW PELLER

Can any of the company-specific risk be diversified away by investing in both BW OFFSHORE and ANDREW PELLER 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 ANDREW PELLER 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 ANDREW PELLER LTD, you can compare the effects of market volatilities on BW OFFSHORE and ANDREW PELLER 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 ANDREW PELLER. Check out your portfolio center. Please also check ongoing floating volatility patterns of BW OFFSHORE and ANDREW PELLER.

Diversification Opportunities for BW OFFSHORE and ANDREW PELLER

0.03

Correlation Coefficient

BW OFFSHORE  ANDREW PELLER

Significant diversification

The 3 months correlation between XY81 and ANDREW is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding BW OFFSHORE LTD and ANDREW PELLER LTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ANDREW PELLER LTD 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 ANDREW PELLER. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ANDREW PELLER LTD has no effect on the direction of BW OFFSHORE i.e., BW OFFSHORE and ANDREW PELLER go up and down completely randomly.

Pair Corralation between BW OFFSHORE and ANDREW PELLER

Assuming the 90 days trading horizon BW OFFSHORE LTD is expected to generate 1.57 times more return on investment than ANDREW PELLER. However, BW OFFSHORE is 1.57 times more volatile than ANDREW PELLER LTD. It trades about 0.22 of its potential returns per unit of risk. ANDREW PELLER LTD is currently generating about 0.11 per unit of risk. If you would invest  235.00  in BW OFFSHORE LTD on October 27, 2024 and sell it today you would earn a total of  24.00  from holding BW OFFSHORE LTD or generate 10.21% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.0%
Values	Daily Returns

BW OFFSHORE LTD  vs.  ANDREW PELLER LTD

BW OFFSHORE LTD

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in BW OFFSHORE LTD are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, BW OFFSHORE is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

ANDREW PELLER LTD

Risk-Adjusted Performance

1 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in ANDREW PELLER LTD are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, ANDREW PELLER is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with BW OFFSHORE and ANDREW PELLER

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

The idea behind BW OFFSHORE LTD and ANDREW PELLER 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.