Correlation Between KINGBOARD CHEMICAL and BW OFFSHORE
Can any of the company-specific risk be diversified away by investing in both KINGBOARD CHEMICAL 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 KINGBOARD CHEMICAL and BW OFFSHORE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KINGBOARD CHEMICAL and BW OFFSHORE LTD, you can compare the effects of market volatilities on KINGBOARD CHEMICAL 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 KINGBOARD CHEMICAL with a short position of BW OFFSHORE. Check out your portfolio center. Please also check ongoing floating volatility patterns of KINGBOARD CHEMICAL and BW OFFSHORE.
Diversification Opportunities for KINGBOARD CHEMICAL and BW OFFSHORE
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between KINGBOARD and XY81 is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding KINGBOARD CHEMICAL 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 KINGBOARD CHEMICAL 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 KINGBOARD CHEMICAL 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 KINGBOARD CHEMICAL i.e., KINGBOARD CHEMICAL and BW OFFSHORE go up and down completely randomly.
Pair Corralation between KINGBOARD CHEMICAL and BW OFFSHORE
Assuming the 90 days trading horizon KINGBOARD CHEMICAL is expected to generate 1.61 times more return on investment than BW OFFSHORE. However, KINGBOARD CHEMICAL is 1.61 times more volatile than BW OFFSHORE LTD. It trades about 0.07 of its potential returns per unit of risk. BW OFFSHORE LTD is currently generating about 0.08 per unit of risk. If you would invest 136.00 in KINGBOARD CHEMICAL on September 4, 2024 and sell it today you would earn a total of 92.00 from holding KINGBOARD CHEMICAL or generate 67.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
KINGBOARD CHEMICAL vs. BW OFFSHORE LTD
Performance |
| Timeline |
| KINGBOARD CHEMICAL |
| BW OFFSHORE LTD |
KINGBOARD CHEMICAL and BW OFFSHORE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KINGBOARD CHEMICAL and BW OFFSHORE
The main advantage of trading using opposite KINGBOARD CHEMICAL and BW OFFSHORE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KINGBOARD CHEMICAL 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.| KINGBOARD CHEMICAL vs. TOTAL GABON | KINGBOARD CHEMICAL vs. Walgreens Boots Alliance | KINGBOARD CHEMICAL vs. Peak Resources Limited |
| BW OFFSHORE vs. Fukuyama Transporting Co | BW OFFSHORE vs. Gold Road Resources | BW OFFSHORE vs. PACIFIC ONLINE | BW OFFSHORE vs. Lamar Advertising |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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