Correlation Between BW Offshore and Gaming Innovation
Can any of the company-specific risk be diversified away by investing in both BW Offshore and Gaming Innovation 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 Gaming Innovation into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BW Offshore and Gaming Innovation Group, you can compare the effects of market volatilities on BW Offshore and Gaming Innovation 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 Gaming Innovation. Check out your portfolio center. Please also check ongoing floating volatility patterns of BW Offshore and Gaming Innovation.
Diversification Opportunities for BW Offshore and Gaming Innovation
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between BWO and Gaming is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding BW Offshore and Gaming Innovation Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gaming Innovation 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 Gaming Innovation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gaming Innovation has no effect on the direction of BW Offshore i.e., BW Offshore and Gaming Innovation go up and down completely randomly.
Pair Corralation between BW Offshore and Gaming Innovation
Assuming the 90 days trading horizon BW Offshore is expected to under-perform the Gaming Innovation. In addition to that, BW Offshore is 1.62 times more volatile than Gaming Innovation Group. It trades about -0.04 of its total potential returns per unit of risk. Gaming Innovation Group is currently generating about 0.0 per unit of volatility. If you would invest 2,480 in Gaming Innovation Group on September 1, 2024 and sell it today you would lose (10.00) from holding Gaming Innovation Group or give up 0.4% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 86.36% |
| Values | Daily Returns |
BW Offshore vs. Gaming Innovation Group
Performance |
| Timeline |
| BW Offshore |
| Gaming Innovation |
BW Offshore and Gaming Innovation Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BW Offshore and Gaming Innovation
The main advantage of trading using opposite BW Offshore and Gaming Innovation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BW Offshore position performs unexpectedly, Gaming Innovation 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 Gaming Innovation will offset losses from the drop in Gaming Innovation's long position.The idea behind BW Offshore and Gaming Innovation Group 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.| Gaming Innovation vs. Catena Media plc | Gaming Innovation vs. Idex ASA | Gaming Innovation vs. XXL ASA | Gaming Innovation vs. Kitron ASA |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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