Correlation Between Sea1 Offshore and Awilco Drilling
Can any of the company-specific risk be diversified away by investing in both Sea1 Offshore and Awilco Drilling 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 Sea1 Offshore and Awilco Drilling into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sea1 Offshore and Awilco Drilling PLC, you can compare the effects of market volatilities on Sea1 Offshore and Awilco Drilling 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 Sea1 Offshore with a short position of Awilco Drilling. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sea1 Offshore and Awilco Drilling.
Diversification Opportunities for Sea1 Offshore and Awilco Drilling
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Sea1 and Awilco is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Sea1 Offshore and Awilco Drilling PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Awilco Drilling PLC and Sea1 Offshore 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 Sea1 Offshore are associated (or correlated) with Awilco Drilling. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Awilco Drilling PLC has no effect on the direction of Sea1 Offshore i.e., Sea1 Offshore and Awilco Drilling go up and down completely randomly.
Pair Corralation between Sea1 Offshore and Awilco Drilling
Assuming the 90 days trading horizon Sea1 Offshore is expected to generate 2.15 times less return on investment than Awilco Drilling. But when comparing it to its historical volatility, Sea1 Offshore is 4.92 times less risky than Awilco Drilling. It trades about 0.08 of its potential returns per unit of risk. Awilco Drilling PLC is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 2,801 in Awilco Drilling PLC on August 28, 2024 and sell it today you would lose (591.00) from holding Awilco Drilling PLC or give up 21.1% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sea1 Offshore vs. Awilco Drilling PLC
Performance |
| Timeline |
| Sea1 Offshore |
| Awilco Drilling PLC |
Sea1 Offshore and Awilco Drilling Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sea1 Offshore and Awilco Drilling
The main advantage of trading using opposite Sea1 Offshore and Awilco Drilling positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sea1 Offshore position performs unexpectedly, Awilco Drilling 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 Awilco Drilling will offset losses from the drop in Awilco Drilling's long position.| Sea1 Offshore vs. Equinor ASA | Sea1 Offshore vs. DnB ASA | Sea1 Offshore vs. Aker BP ASA | Sea1 Offshore vs. Telenor 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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