Correlation Between BW OFFSHORE and H M

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

Diversification Opportunities for BW OFFSHORE and H M

-0.52

Correlation Coefficient

BW OFFSHORE  H M

Excellent diversification

The 3 months correlation between XY81 and HMSB is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding BW OFFSHORE LTD and H M Hennes in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on H M Hennes 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 H M. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of H M Hennes has no effect on the direction of BW OFFSHORE i.e., BW OFFSHORE and H M go up and down completely randomly.

Pair Corralation between BW OFFSHORE and H M

Assuming the 90 days trading horizon BW OFFSHORE is expected to generate 3.4 times less return on investment than H M. But when comparing it to its historical volatility, BW OFFSHORE LTD is 1.61 times less risky than H M. It trades about 0.04 of its potential returns per unit of risk. H M Hennes is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  392.00  in H M Hennes on October 10, 2024 and sell it today you would earn a total of  881.00  from holding H M Hennes or generate 224.74% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	99.2%
Values	Daily Returns

BW OFFSHORE LTD  vs.  H M Hennes

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

H M Hennes

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in H M Hennes are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile fundamental drivers, H M exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with BW OFFSHORE and H M

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

The idea behind BW OFFSHORE LTD and H M Hennes 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.