Correlation Between BW Offshore and PCI Biotech
Can any of the company-specific risk be diversified away by investing in both BW Offshore and PCI Biotech 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 PCI Biotech into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BW Offshore and PCI Biotech Holding, you can compare the effects of market volatilities on BW Offshore and PCI Biotech 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 PCI Biotech. Check out your portfolio center. Please also check ongoing floating volatility patterns of BW Offshore and PCI Biotech.
Diversification Opportunities for BW Offshore and PCI Biotech
-0.18 | Correlation Coefficient |
Good diversification
The 3 months correlation between BWO and PCI is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding BW Offshore and PCI Biotech Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PCI Biotech Holding 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 PCI Biotech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PCI Biotech Holding has no effect on the direction of BW Offshore i.e., BW Offshore and PCI Biotech go up and down completely randomly.
Pair Corralation between BW Offshore and PCI Biotech
Assuming the 90 days trading horizon BW Offshore is expected to generate 0.38 times more return on investment than PCI Biotech. However, BW Offshore is 2.6 times less risky than PCI Biotech. It trades about 0.01 of its potential returns per unit of risk. PCI Biotech Holding is currently generating about -0.02 per unit of risk. If you would invest 2,683 in BW Offshore on September 4, 2024 and sell it today you would earn a total of 2.00 from holding BW Offshore or generate 0.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BW Offshore vs. PCI Biotech Holding
Performance |
| Timeline |
| BW Offshore |
| PCI Biotech Holding |
BW Offshore and PCI Biotech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BW Offshore and PCI Biotech
The main advantage of trading using opposite BW Offshore and PCI Biotech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BW Offshore position performs unexpectedly, PCI Biotech 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 PCI Biotech will offset losses from the drop in PCI Biotech's long position.The idea behind BW Offshore and PCI Biotech Holding 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.| PCI Biotech vs. Nordic Mining ASA | PCI Biotech vs. BW Offshore | PCI Biotech vs. Nidaros Sparebank | PCI Biotech vs. Aasen Sparebank |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
Other Complementary Tools
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
| Content Syndication Quickly integrate customizable finance content to your own investment portal | |
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like | |
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges |