Correlation Between BW OFFSHORE and NORDHEALTH
Can any of the company-specific risk be diversified away by investing in both BW OFFSHORE and NORDHEALTH 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 BW OFFSHORE and NORDHEALTH into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BW OFFSHORE LTD and NORDHEALTH AS NK, you can compare the effects of market volatilities on BW OFFSHORE and NORDHEALTH 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 BW OFFSHORE with a short position of NORDHEALTH. Check out your portfolio center. Please also check ongoing floating volatility patterns of BW OFFSHORE and NORDHEALTH.
Diversification Opportunities for BW OFFSHORE and NORDHEALTH
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between XY81 and NORDHEALTH is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding BW OFFSHORE LTD and NORDHEALTH AS NK in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NORDHEALTH AS NK and BW 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 BW OFFSHORE LTD are associated (or correlated) with NORDHEALTH. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NORDHEALTH AS NK has no effect on the direction of BW OFFSHORE i.e., BW OFFSHORE and NORDHEALTH go up and down completely randomly.
Pair Corralation between BW OFFSHORE and NORDHEALTH
Assuming the 90 days trading horizon BW OFFSHORE is expected to generate 5.84 times less return on investment than NORDHEALTH. But when comparing it to its historical volatility, BW OFFSHORE LTD is 2.24 times less risky than NORDHEALTH. It trades about 0.02 of its potential returns per unit of risk. NORDHEALTH AS NK is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 168.00 in NORDHEALTH AS NK on August 24, 2024 and sell it today you would earn a total of 139.00 from holding NORDHEALTH AS NK or generate 82.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BW OFFSHORE LTD vs. NORDHEALTH AS NK
Performance |
| Timeline |
| BW OFFSHORE LTD |
| NORDHEALTH AS NK |
BW OFFSHORE and NORDHEALTH Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BW OFFSHORE and NORDHEALTH
The main advantage of trading using opposite BW OFFSHORE and NORDHEALTH positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BW OFFSHORE position performs unexpectedly, NORDHEALTH 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 NORDHEALTH will offset losses from the drop in NORDHEALTH's long position.| BW OFFSHORE vs. Halliburton | BW OFFSHORE vs. Halliburton | BW OFFSHORE vs. Baker Hughes Co | BW OFFSHORE vs. Tenaris SA |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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