Correlation Between BW Offshore and Gamma Communications
Can any of the company-specific risk be diversified away by investing in both BW Offshore and Gamma Communications 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 Gamma Communications into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BW Offshore and Gamma Communications PLC, you can compare the effects of market volatilities on BW Offshore and Gamma Communications 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 Gamma Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of BW Offshore and Gamma Communications.
Diversification Opportunities for BW Offshore and Gamma Communications
-0.52 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between 0RKH and Gamma is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding BW Offshore and Gamma Communications PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gamma Communications PLC 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 are associated (or correlated) with Gamma Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gamma Communications PLC has no effect on the direction of BW Offshore i.e., BW Offshore and Gamma Communications go up and down completely randomly.
Pair Corralation between BW Offshore and Gamma Communications
Assuming the 90 days trading horizon BW Offshore is expected to generate 1.88 times more return on investment than Gamma Communications. However, BW Offshore is 1.88 times more volatile than Gamma Communications PLC. It trades about 0.04 of its potential returns per unit of risk. Gamma Communications PLC is currently generating about 0.03 per unit of risk. If you would invest 2,210 in BW Offshore on October 31, 2024 and sell it today you would earn a total of 835.00 from holding BW Offshore or generate 37.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 98.59% |
| Values | Daily Returns |
BW Offshore vs. Gamma Communications PLC
Performance |
| Timeline |
| BW Offshore |
| Gamma Communications PLC |
BW Offshore and Gamma Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BW Offshore and Gamma Communications
The main advantage of trading using opposite BW Offshore and Gamma Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BW Offshore position performs unexpectedly, Gamma Communications 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 Gamma Communications will offset losses from the drop in Gamma Communications' long position.| BW Offshore vs. Compagnie Plastic Omnium | BW Offshore vs. Vulcan Materials Co | BW Offshore vs. MTI Wireless Edge | BW Offshore vs. Travel Leisure Co |
| Gamma Communications vs. SupplyMe Capital PLC | Gamma Communications vs. Lloyds Banking Group | Gamma Communications vs. Premier African Minerals | Gamma Communications vs. SANTANDER UK 8 |
Check out your portfolio center.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.
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