Correlation Between BW OFFSHORE and LANSON BCC

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

Diversification Opportunities for BW OFFSHORE and LANSON BCC

0.31

Correlation Coefficient

BW OFFSHORE  LANSON BCC

Weak diversification

The 3 months correlation between XY81 and LANSON is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding BW OFFSHORE LTD and LANSON BCC INH EO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LANSON BCC INH 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 LANSON BCC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LANSON BCC INH has no effect on the direction of BW OFFSHORE i.e., BW OFFSHORE and LANSON BCC go up and down completely randomly.

Pair Corralation between BW OFFSHORE and LANSON BCC

Assuming the 90 days trading horizon BW OFFSHORE LTD is expected to generate 1.54 times more return on investment than LANSON BCC. However, BW OFFSHORE is 1.54 times more volatile than LANSON BCC INH EO. It trades about 0.04 of its potential returns per unit of risk. LANSON BCC INH EO is currently generating about 0.02 per unit of risk. If you would invest  192.00  in BW OFFSHORE LTD on October 26, 2024 and sell it today you would earn a total of  67.00  from holding BW OFFSHORE LTD or generate 34.9% return on investment over 90 days.

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

BW OFFSHORE LTD  vs.  LANSON BCC INH EO

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 latest stock price disturbance, may contribute to mid-run losses for the stockholders.

LANSON BCC INH

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days LANSON BCC INH EO has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with BW OFFSHORE and LANSON BCC

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

The idea behind BW OFFSHORE LTD and LANSON BCC INH EO 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.