Correlation Between CHINA EDUCATION and BW OFFSHORE
Can any of the company-specific risk be diversified away by investing in both CHINA EDUCATION 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 CHINA EDUCATION and BW OFFSHORE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CHINA EDUCATION GROUP and BW OFFSHORE LTD, you can compare the effects of market volatilities on CHINA EDUCATION 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 CHINA EDUCATION with a short position of BW OFFSHORE. Check out your portfolio center. Please also check ongoing floating volatility patterns of CHINA EDUCATION and BW OFFSHORE.
Diversification Opportunities for CHINA EDUCATION and BW OFFSHORE
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between CHINA and XY81 is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding CHINA EDUCATION GROUP and BW OFFSHORE LTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BW OFFSHORE LTD and CHINA EDUCATION 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 CHINA EDUCATION GROUP 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 LTD has no effect on the direction of CHINA EDUCATION i.e., CHINA EDUCATION and BW OFFSHORE go up and down completely randomly.
Pair Corralation between CHINA EDUCATION and BW OFFSHORE
Assuming the 90 days horizon CHINA EDUCATION GROUP is expected to under-perform the BW OFFSHORE. But the stock apears to be less risky and, when comparing its historical volatility, CHINA EDUCATION GROUP is 1.12 times less risky than BW OFFSHORE. The stock trades about -0.43 of its potential returns per unit of risk. The BW OFFSHORE LTD is currently generating about 0.35 of returns per unit of risk over similar time horizon. If you would invest 231.00 in BW OFFSHORE LTD on October 12, 2024 and sell it today you would earn a total of 30.00 from holding BW OFFSHORE LTD or generate 12.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
CHINA EDUCATION GROUP vs. BW OFFSHORE LTD
Performance |
| Timeline |
| CHINA EDUCATION GROUP |
| BW OFFSHORE LTD |
CHINA EDUCATION and BW OFFSHORE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CHINA EDUCATION and BW OFFSHORE
The main advantage of trading using opposite CHINA EDUCATION and BW OFFSHORE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CHINA EDUCATION 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.| CHINA EDUCATION vs. COSTCO WHOLESALE CDR | CHINA EDUCATION vs. Burlington Stores | CHINA EDUCATION vs. RETAIL FOOD GROUP | CHINA EDUCATION vs. BJs Wholesale Club |
| BW OFFSHORE vs. CarsalesCom | BW OFFSHORE vs. SANOK RUBBER ZY | BW OFFSHORE vs. Mitsubishi Materials | BW OFFSHORE vs. Vulcan Materials |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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