Correlation Between BW OFFSHORE and NISSIN FOODS

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

Diversification Opportunities for BW OFFSHORE and NISSIN FOODS

-0.46

Correlation Coefficient

BW OFFSHORE  NISSIN FOODS

Very good diversification

The 3 months correlation between XY81 and NISSIN is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding BW OFFSHORE LTD and NISSIN FOODS HLDGS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NISSIN FOODS HLDGS 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 NISSIN FOODS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NISSIN FOODS HLDGS has no effect on the direction of BW OFFSHORE i.e., BW OFFSHORE and NISSIN FOODS go up and down completely randomly.

Pair Corralation between BW OFFSHORE and NISSIN FOODS

Assuming the 90 days trading horizon BW OFFSHORE LTD is expected to generate 1.46 times more return on investment than NISSIN FOODS. However, BW OFFSHORE is 1.46 times more volatile than NISSIN FOODS HLDGS. It trades about 0.1 of its potential returns per unit of risk. NISSIN FOODS HLDGS is currently generating about -0.19 per unit of risk. If you would invest  233.00  in BW OFFSHORE LTD on December 29, 2024 and sell it today you would earn a total of  30.00  from holding BW OFFSHORE LTD or generate 12.88% return on investment over 90 days.

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

BW OFFSHORE LTD  vs.  NISSIN FOODS HLDGS

BW OFFSHORE LTD

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in BW OFFSHORE LTD are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, BW OFFSHORE reported solid returns over the last few months and may actually be approaching a breakup point.

NISSIN FOODS HLDGS

Risk-Adjusted Performance

Very Weak

Over the last 90 days NISSIN FOODS HLDGS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with BW OFFSHORE and NISSIN FOODS

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

The idea behind BW OFFSHORE LTD and NISSIN FOODS HLDGS 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.