Correlation Between Napatech and BW Offshore
Can any of the company-specific risk be diversified away by investing in both Napatech 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 Napatech and BW Offshore into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Napatech AS and BW Offshore, you can compare the effects of market volatilities on Napatech 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 Napatech with a short position of BW Offshore. Check out your portfolio center. Please also check ongoing floating volatility patterns of Napatech and BW Offshore.
Diversification Opportunities for Napatech and BW Offshore
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Napatech and BWO is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Napatech AS and BW Offshore in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BW Offshore and Napatech 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 Napatech AS 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 has no effect on the direction of Napatech i.e., Napatech and BW Offshore go up and down completely randomly.
Pair Corralation between Napatech and BW Offshore
Assuming the 90 days trading horizon Napatech AS is expected to generate 1.65 times more return on investment than BW Offshore. However, Napatech is 1.65 times more volatile than BW Offshore. It trades about 0.07 of its potential returns per unit of risk. BW Offshore is currently generating about 0.04 per unit of risk. If you would invest 1,098 in Napatech AS on November 27, 2024 and sell it today you would earn a total of 1,402 from holding Napatech AS or generate 127.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Napatech AS vs. BW Offshore
Performance |
| Timeline |
| Napatech AS |
| BW Offshore |
Napatech and BW Offshore Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Napatech and BW Offshore
The main advantage of trading using opposite Napatech and BW Offshore positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Napatech 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.| Napatech vs. Idex ASA | Napatech vs. Next Biometrics Group | Napatech vs. Polight ASA | Napatech vs. Kitron ASA |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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