Correlation Between BW OFFSHORE and Cleanaway Waste

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

Diversification Opportunities for BW OFFSHORE and Cleanaway Waste

0.1

Correlation Coefficient

BW OFFSHORE  Cleanaway Waste

Average diversification

The 3 months correlation between XY81 and Cleanaway is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding BW OFFSHORE LTD and Cleanaway Waste Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cleanaway Waste Mana 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 Cleanaway Waste. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cleanaway Waste Mana has no effect on the direction of BW OFFSHORE i.e., BW OFFSHORE and Cleanaway Waste go up and down completely randomly.

Pair Corralation between BW OFFSHORE and Cleanaway Waste

Assuming the 90 days trading horizon BW OFFSHORE LTD is expected to generate 0.93 times more return on investment than Cleanaway Waste. However, BW OFFSHORE LTD is 1.08 times less risky than Cleanaway Waste. It trades about 0.09 of its potential returns per unit of risk. Cleanaway Waste Management is currently generating about -0.01 per unit of risk. If you would invest  233.00  in BW OFFSHORE LTD on December 30, 2024 and sell it today you would earn a total of  27.00  from holding BW OFFSHORE LTD or generate 11.59% return on investment over 90 days.

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

BW OFFSHORE LTD  vs.  Cleanaway Waste Management

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 fragile basic indicators, BW OFFSHORE may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Cleanaway Waste Mana

Risk-Adjusted Performance

Very Weak

Over the last 90 days Cleanaway Waste Management has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Cleanaway Waste is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with BW OFFSHORE and Cleanaway Waste

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

The idea behind BW OFFSHORE LTD and Cleanaway Waste Management 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.