Correlation Between BW OFFSHORE and KINGBOARD CHEMICAL
Can any of the company-specific risk be diversified away by investing in both BW OFFSHORE and KINGBOARD CHEMICAL 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 KINGBOARD CHEMICAL 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 KINGBOARD CHEMICAL, you can compare the effects of market volatilities on BW OFFSHORE and KINGBOARD CHEMICAL 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 KINGBOARD CHEMICAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of BW OFFSHORE and KINGBOARD CHEMICAL.
Diversification Opportunities for BW OFFSHORE and KINGBOARD CHEMICAL
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between XY81 and KINGBOARD is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding BW OFFSHORE LTD and KINGBOARD CHEMICAL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KINGBOARD CHEMICAL 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 KINGBOARD CHEMICAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KINGBOARD CHEMICAL has no effect on the direction of BW OFFSHORE i.e., BW OFFSHORE and KINGBOARD CHEMICAL go up and down completely randomly.
Pair Corralation between BW OFFSHORE and KINGBOARD CHEMICAL
Assuming the 90 days trading horizon BW OFFSHORE is expected to generate 1.51 times less return on investment than KINGBOARD CHEMICAL. But when comparing it to its historical volatility, BW OFFSHORE LTD is 1.61 times less risky than KINGBOARD CHEMICAL. It trades about 0.08 of its potential returns per unit of risk. KINGBOARD CHEMICAL is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 136.00 in KINGBOARD CHEMICAL on September 4, 2024 and sell it today you would earn a total of 92.00 from holding KINGBOARD CHEMICAL or generate 67.65% 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. KINGBOARD CHEMICAL
Performance |
| Timeline |
| BW OFFSHORE LTD |
| KINGBOARD CHEMICAL |
BW OFFSHORE and KINGBOARD CHEMICAL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BW OFFSHORE and KINGBOARD CHEMICAL
The main advantage of trading using opposite BW OFFSHORE and KINGBOARD CHEMICAL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BW OFFSHORE position performs unexpectedly, KINGBOARD CHEMICAL 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 KINGBOARD CHEMICAL will offset losses from the drop in KINGBOARD CHEMICAL's long position.| BW OFFSHORE vs. Fukuyama Transporting Co | BW OFFSHORE vs. Gold Road Resources | BW OFFSHORE vs. PACIFIC ONLINE | BW OFFSHORE vs. Lamar Advertising |
| KINGBOARD CHEMICAL vs. TOTAL GABON | KINGBOARD CHEMICAL vs. Walgreens Boots Alliance | KINGBOARD CHEMICAL vs. Peak Resources Limited |
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 Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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