Correlation Between Aeorema Communications and BW Offshore
Can any of the company-specific risk be diversified away by investing in both Aeorema Communications and BW Offshore 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 Aeorema Communications and BW Offshore into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aeorema Communications Plc and BW Offshore, you can compare the effects of market volatilities on Aeorema Communications and BW Offshore 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 Aeorema Communications with a short position of BW Offshore. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aeorema Communications and BW Offshore.
Diversification Opportunities for Aeorema Communications and BW Offshore
-0.53 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Aeorema and 0RKH is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Aeorema Communications Plc and BW Offshore in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BW Offshore and Aeorema Communications 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 Aeorema Communications Plc are associated (or correlated) with BW Offshore. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BW Offshore has no effect on the direction of Aeorema Communications i.e., Aeorema Communications and BW Offshore go up and down completely randomly.
Pair Corralation between Aeorema Communications and BW Offshore
Assuming the 90 days trading horizon Aeorema Communications Plc is expected to under-perform the BW Offshore. In addition to that, Aeorema Communications is 1.12 times more volatile than BW Offshore. It trades about -0.13 of its total potential returns per unit of risk. BW Offshore is currently generating about 0.23 per unit of volatility. If you would invest 2,740 in BW Offshore on October 11, 2024 and sell it today you would earn a total of 265.00 from holding BW Offshore or generate 9.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aeorema Communications Plc vs. BW Offshore
Performance |
| Timeline |
| Aeorema Communications |
| BW Offshore |
Aeorema Communications and BW Offshore Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aeorema Communications and BW Offshore
The main advantage of trading using opposite Aeorema Communications and BW Offshore positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aeorema Communications position performs unexpectedly, BW Offshore 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 BW Offshore will offset losses from the drop in BW Offshore's long position.| Aeorema Communications vs. LBG Media PLC | Aeorema Communications vs. Summit Materials Cl | Aeorema Communications vs. Zinc Media Group | Aeorema Communications vs. Morgan Advanced Materials |
| BW Offshore vs. Aeorema Communications Plc | BW Offshore vs. Spirent Communications plc | BW Offshore vs. Polar Capital Technology | BW Offshore vs. Technicolor |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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