Correlation Between Okea ASA and BW Offshore
Can any of the company-specific risk be diversified away by investing in both Okea ASA 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 Okea ASA and BW Offshore into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Okea ASA and BW Offshore, you can compare the effects of market volatilities on Okea ASA 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 Okea ASA with a short position of BW Offshore. Check out your portfolio center. Please also check ongoing floating volatility patterns of Okea ASA and BW Offshore.
Diversification Opportunities for Okea ASA and BW Offshore
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Okea and BWO is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Okea ASA and BW Offshore in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BW Offshore and Okea ASA 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 Okea ASA 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 Okea ASA i.e., Okea ASA and BW Offshore go up and down completely randomly.
Pair Corralation between Okea ASA and BW Offshore
Assuming the 90 days trading horizon Okea ASA is expected to under-perform the BW Offshore. But the stock apears to be less risky and, when comparing its historical volatility, Okea ASA is 1.72 times less risky than BW Offshore. The stock trades about -0.31 of its potential returns per unit of risk. The BW Offshore is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest 2,907 in BW Offshore on September 1, 2024 and sell it today you would lose (117.00) from holding BW Offshore or give up 4.02% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Okea ASA vs. BW Offshore
Performance |
| Timeline |
| Okea ASA |
| BW Offshore |
Okea ASA and BW Offshore Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Okea ASA and BW Offshore
The main advantage of trading using opposite Okea ASA and BW Offshore positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Okea ASA 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.| Okea ASA vs. Kraft Bank Asa | Okea ASA vs. Cloudberry Clean Energy | Okea ASA vs. Shelf Drilling | Okea ASA vs. Morrow Bank 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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