Correlation Between BW OFFSHORE and Digilife Technologies
Can any of the company-specific risk be diversified away by investing in both BW OFFSHORE and Digilife Technologies 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 Digilife Technologies 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 Digilife Technologies Limited, you can compare the effects of market volatilities on BW OFFSHORE and Digilife Technologies 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 Digilife Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of BW OFFSHORE and Digilife Technologies.
Diversification Opportunities for BW OFFSHORE and Digilife Technologies
-0.03 | Correlation Coefficient |
Good diversification
The 3 months correlation between XY81 and Digilife is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding BW OFFSHORE LTD and Digilife Technologies Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Digilife Technologies 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 Digilife Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Digilife Technologies has no effect on the direction of BW OFFSHORE i.e., BW OFFSHORE and Digilife Technologies go up and down completely randomly.
Pair Corralation between BW OFFSHORE and Digilife Technologies
Assuming the 90 days trading horizon BW OFFSHORE LTD is expected to generate 0.44 times more return on investment than Digilife Technologies. However, BW OFFSHORE LTD is 2.29 times less risky than Digilife Technologies. It trades about 0.05 of its potential returns per unit of risk. Digilife Technologies Limited is currently generating about -0.01 per unit of risk. If you would invest 200.00 in BW OFFSHORE LTD on September 1, 2024 and sell it today you would earn a total of 33.00 from holding BW OFFSHORE LTD or generate 16.5% 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. Digilife Technologies Limited
Performance |
| Timeline |
| BW OFFSHORE LTD |
| Digilife Technologies |
BW OFFSHORE and Digilife Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BW OFFSHORE and Digilife Technologies
The main advantage of trading using opposite BW OFFSHORE and Digilife Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BW OFFSHORE position performs unexpectedly, Digilife Technologies 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 Digilife Technologies will offset losses from the drop in Digilife Technologies' long position.| BW OFFSHORE vs. Zurich Insurance Group | BW OFFSHORE vs. NIPPON MEAT PACKERS | BW OFFSHORE vs. PT Indofood Sukses | BW OFFSHORE vs. JJ SNACK FOODS |
| Digilife Technologies vs. ATT Inc | Digilife Technologies vs. Deutsche Telekom AG | Digilife Technologies vs. Superior Plus Corp | Digilife Technologies vs. NMI Holdings |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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