Correlation Between BW OFFSHORE and Evonik Industries
Can any of the company-specific risk be diversified away by investing in both BW OFFSHORE and Evonik Industries 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 Evonik Industries 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 Evonik Industries AG, you can compare the effects of market volatilities on BW OFFSHORE and Evonik Industries 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 Evonik Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of BW OFFSHORE and Evonik Industries.
Diversification Opportunities for BW OFFSHORE and Evonik Industries
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between XY81 and Evonik is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding BW OFFSHORE LTD and Evonik Industries AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Evonik Industries 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 Evonik Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Evonik Industries has no effect on the direction of BW OFFSHORE i.e., BW OFFSHORE and Evonik Industries go up and down completely randomly.
Pair Corralation between BW OFFSHORE and Evonik Industries
Assuming the 90 days trading horizon BW OFFSHORE LTD is expected to generate 1.81 times more return on investment than Evonik Industries. However, BW OFFSHORE is 1.81 times more volatile than Evonik Industries AG. It trades about 0.04 of its potential returns per unit of risk. Evonik Industries AG is currently generating about 0.0 per unit of risk. If you would invest 192.00 in BW OFFSHORE LTD on October 7, 2024 and sell it today you would earn a total of 71.00 from holding BW OFFSHORE LTD or generate 36.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BW OFFSHORE LTD vs. Evonik Industries AG
Performance |
| Timeline |
| BW OFFSHORE LTD |
| Evonik Industries |
BW OFFSHORE and Evonik Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BW OFFSHORE and Evonik Industries
The main advantage of trading using opposite BW OFFSHORE and Evonik Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BW OFFSHORE position performs unexpectedly, Evonik Industries 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 Evonik Industries will offset losses from the drop in Evonik Industries' long position.| BW OFFSHORE vs. Superior Plus Corp | BW OFFSHORE vs. NMI Holdings | BW OFFSHORE vs. SIVERS SEMICONDUCTORS AB | BW OFFSHORE vs. Talanx AG |
| Evonik Industries vs. Semiconductor Manufacturing International | Evonik Industries vs. The Hanover Insurance | Evonik Industries vs. CanSino Biologics | Evonik Industries vs. INSURANCE AUST GRP |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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