Correlation Between BH Macro and Odfjell Drilling
Can any of the company-specific risk be diversified away by investing in both BH Macro and Odfjell Drilling 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 BH Macro and Odfjell Drilling into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BH Macro Limited and Odfjell Drilling, you can compare the effects of market volatilities on BH Macro and Odfjell Drilling 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 BH Macro with a short position of Odfjell Drilling. Check out your portfolio center. Please also check ongoing floating volatility patterns of BH Macro and Odfjell Drilling.
Diversification Opportunities for BH Macro and Odfjell Drilling
-0.14 | Correlation Coefficient |
Good diversification
The 3 months correlation between BHMU and Odfjell is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding BH Macro Limited and Odfjell Drilling in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Odfjell Drilling and BH Macro 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 BH Macro Limited are associated (or correlated) with Odfjell Drilling. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Odfjell Drilling has no effect on the direction of BH Macro i.e., BH Macro and Odfjell Drilling go up and down completely randomly.
Pair Corralation between BH Macro and Odfjell Drilling
Assuming the 90 days trading horizon BH Macro Limited is expected to generate 0.83 times more return on investment than Odfjell Drilling. However, BH Macro Limited is 1.21 times less risky than Odfjell Drilling. It trades about 0.25 of its potential returns per unit of risk. Odfjell Drilling is currently generating about -0.08 per unit of risk. If you would invest 387.00 in BH Macro Limited on August 30, 2024 and sell it today you would earn a total of 31.00 from holding BH Macro Limited or generate 8.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BH Macro Limited vs. Odfjell Drilling
Performance |
| Timeline |
| BH Macro Limited |
| Odfjell Drilling |
BH Macro and Odfjell Drilling Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BH Macro and Odfjell Drilling
The main advantage of trading using opposite BH Macro and Odfjell Drilling positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BH Macro position performs unexpectedly, Odfjell Drilling 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 Odfjell Drilling will offset losses from the drop in Odfjell Drilling's long position.| BH Macro vs. Toyota Motor Corp | BH Macro vs. Neometals | BH Macro vs. Coor Service Management | BH Macro vs. Jupiter Fund Management |
| Odfjell Drilling vs. Lendinvest PLC | Odfjell Drilling vs. Neometals | Odfjell Drilling vs. Albion Technology General | Odfjell Drilling vs. Jupiter Fund Management |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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