Correlation Between BW OFFSHORE and ORIX
Can any of the company-specific risk be diversified away by investing in both BW OFFSHORE and ORIX 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 ORIX 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 ORIX Corporation, you can compare the effects of market volatilities on BW OFFSHORE and ORIX 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 ORIX. Check out your portfolio center. Please also check ongoing floating volatility patterns of BW OFFSHORE and ORIX.
Diversification Opportunities for BW OFFSHORE and ORIX
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between XY81 and ORIX is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding BW OFFSHORE LTD and ORIX Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ORIX 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 ORIX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ORIX has no effect on the direction of BW OFFSHORE i.e., BW OFFSHORE and ORIX go up and down completely randomly.
Pair Corralation between BW OFFSHORE and ORIX
Assuming the 90 days trading horizon BW OFFSHORE LTD is expected to under-perform the ORIX. In addition to that, BW OFFSHORE is 1.44 times more volatile than ORIX Corporation. It trades about -0.06 of its total potential returns per unit of risk. ORIX Corporation is currently generating about 0.16 per unit of volatility. If you would invest 1,950 in ORIX Corporation on September 4, 2024 and sell it today you would earn a total of 150.00 from holding ORIX Corporation or generate 7.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
BW OFFSHORE LTD vs. ORIX Corp.
Performance |
| Timeline |
| BW OFFSHORE LTD |
| ORIX |
BW OFFSHORE and ORIX Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BW OFFSHORE and ORIX
The main advantage of trading using opposite BW OFFSHORE and ORIX positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BW OFFSHORE position performs unexpectedly, ORIX 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 ORIX will offset losses from the drop in ORIX'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 |
| ORIX vs. BW OFFSHORE LTD | ORIX vs. Eidesvik Offshore ASA | ORIX vs. American Public Education | ORIX vs. Perdoceo Education |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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