Correlation Between Kulicke and BW Offshore
Can any of the company-specific risk be diversified away by investing in both Kulicke 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 Kulicke and BW Offshore into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kulicke and Soffa and BW Offshore Limited, you can compare the effects of market volatilities on Kulicke 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 Kulicke with a short position of BW Offshore. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kulicke and BW Offshore.
Diversification Opportunities for Kulicke and BW Offshore
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Kulicke and BWOFY is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Kulicke and Soffa and BW Offshore Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BW Offshore Limited and Kulicke 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 Kulicke and Soffa 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 Limited has no effect on the direction of Kulicke i.e., Kulicke and BW Offshore go up and down completely randomly.
Pair Corralation between Kulicke and BW Offshore
Given the investment horizon of 90 days Kulicke and Soffa is expected to under-perform the BW Offshore. In addition to that, Kulicke is 1.7 times more volatile than BW Offshore Limited. It trades about 0.0 of its total potential returns per unit of risk. BW Offshore Limited is currently generating about 0.07 per unit of volatility. If you would invest 412.00 in BW Offshore Limited on September 12, 2024 and sell it today you would earn a total of 143.00 from holding BW Offshore Limited or generate 34.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.72% |
| Values | Daily Returns |
Kulicke and Soffa vs. BW Offshore Limited
Performance |
| Timeline |
| Kulicke and Soffa |
| BW Offshore Limited |
Kulicke and BW Offshore Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kulicke and BW Offshore
The main advantage of trading using opposite Kulicke and BW Offshore positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kulicke 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.The idea behind Kulicke and Soffa and BW Offshore Limited 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.| BW Offshore vs. Legacy Education | BW Offshore vs. Apple Inc | BW Offshore vs. NVIDIA | BW Offshore vs. Microsoft |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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