Correlation Between BW Offshore and Proximar Seafood
Can any of the company-specific risk be diversified away by investing in both BW Offshore and Proximar Seafood 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 Proximar Seafood into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BW Offshore and Proximar Seafood AS, you can compare the effects of market volatilities on BW Offshore and Proximar Seafood 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 Proximar Seafood. Check out your portfolio center. Please also check ongoing floating volatility patterns of BW Offshore and Proximar Seafood.
Diversification Opportunities for BW Offshore and Proximar Seafood
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between BWO and Proximar is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding BW Offshore and Proximar Seafood AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Proximar Seafood 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 Proximar Seafood. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Proximar Seafood has no effect on the direction of BW Offshore i.e., BW Offshore and Proximar Seafood go up and down completely randomly.
Pair Corralation between BW Offshore and Proximar Seafood
Assuming the 90 days trading horizon BW Offshore is expected to under-perform the Proximar Seafood. In addition to that, BW Offshore is 1.13 times more volatile than Proximar Seafood AS. It trades about -0.02 of its total potential returns per unit of risk. Proximar Seafood AS is currently generating about 0.01 per unit of volatility. If you would invest 355.00 in Proximar Seafood AS on October 25, 2024 and sell it today you would earn a total of 0.00 from holding Proximar Seafood AS or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BW Offshore vs. Proximar Seafood AS
Performance |
| Timeline |
| BW Offshore |
| Proximar Seafood |
BW Offshore and Proximar Seafood Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BW Offshore and Proximar Seafood
The main advantage of trading using opposite BW Offshore and Proximar Seafood positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BW Offshore position performs unexpectedly, Proximar Seafood 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 Proximar Seafood will offset losses from the drop in Proximar Seafood's long position.The idea behind BW Offshore and Proximar Seafood AS 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.| Proximar Seafood vs. Aurskog Sparebank | Proximar Seafood vs. Romsdal Sparebank | Proximar Seafood vs. Nordic Mining ASA | Proximar Seafood vs. Sparebanken Ost |
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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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