Correlation Between BW Offshore and Synthomer Plc
Can any of the company-specific risk be diversified away by investing in both BW Offshore and Synthomer Plc 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 Synthomer Plc into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BW Offshore and Synthomer plc, you can compare the effects of market volatilities on BW Offshore and Synthomer Plc 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 Synthomer Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of BW Offshore and Synthomer Plc.
Diversification Opportunities for BW Offshore and Synthomer Plc
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between 0RKH and Synthomer is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding BW Offshore and Synthomer plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Synthomer 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 Synthomer Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Synthomer plc has no effect on the direction of BW Offshore i.e., BW Offshore and Synthomer Plc go up and down completely randomly.
Pair Corralation between BW Offshore and Synthomer Plc
Assuming the 90 days trading horizon BW Offshore is expected to generate 0.7 times more return on investment than Synthomer Plc. However, BW Offshore is 1.42 times less risky than Synthomer Plc. It trades about 0.04 of its potential returns per unit of risk. Synthomer plc is currently generating about -0.09 per unit of risk. If you would invest 2,187 in BW Offshore on October 15, 2024 and sell it today you would earn a total of 916.00 from holding BW Offshore or generate 41.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 98.59% |
| Values | Daily Returns |
BW Offshore vs. Synthomer plc
Performance |
| Timeline |
| BW Offshore |
| Synthomer plc |
BW Offshore and Synthomer Plc Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BW Offshore and Synthomer Plc
The main advantage of trading using opposite BW Offshore and Synthomer Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BW Offshore position performs unexpectedly, Synthomer Plc 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 Synthomer Plc will offset losses from the drop in Synthomer Plc's long position.| BW Offshore vs. PPHE Hotel Group | BW Offshore vs. STMicroelectronics NV | BW Offshore vs. Arrow Electronics | BW Offshore vs. Dairy Farm International |
| Synthomer Plc vs. Metals Exploration Plc | Synthomer Plc vs. Jupiter Fund Management | Synthomer Plc vs. Empire Metals Limited | Synthomer Plc vs. One Media iP |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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