Correlation Between BW OFFSHORE and Ontex Group
Can any of the company-specific risk be diversified away by investing in both BW OFFSHORE and Ontex Group 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 Ontex Group 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 Ontex Group NV, you can compare the effects of market volatilities on BW OFFSHORE and Ontex Group 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 Ontex Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of BW OFFSHORE and Ontex Group.
Diversification Opportunities for BW OFFSHORE and Ontex Group
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between XY81 and Ontex is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding BW OFFSHORE LTD and Ontex Group NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ontex Group NV 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 Ontex Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ontex Group NV has no effect on the direction of BW OFFSHORE i.e., BW OFFSHORE and Ontex Group go up and down completely randomly.
Pair Corralation between BW OFFSHORE and Ontex Group
Assuming the 90 days trading horizon BW OFFSHORE LTD is expected to generate 1.45 times more return on investment than Ontex Group. However, BW OFFSHORE is 1.45 times more volatile than Ontex Group NV. It trades about 0.03 of its potential returns per unit of risk. Ontex Group NV is currently generating about 0.02 per unit of risk. If you would invest 191.00 in BW OFFSHORE LTD on September 12, 2024 and sell it today you would earn a total of 32.00 from holding BW OFFSHORE LTD or generate 16.75% 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. Ontex Group NV
Performance |
| Timeline |
| BW OFFSHORE LTD |
| Ontex Group NV |
BW OFFSHORE and Ontex Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BW OFFSHORE and Ontex Group
The main advantage of trading using opposite BW OFFSHORE and Ontex Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BW OFFSHORE position performs unexpectedly, Ontex Group 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 Ontex Group will offset losses from the drop in Ontex Group's long position.| BW OFFSHORE vs. Tenaris SA | BW OFFSHORE vs. NOV Inc | BW OFFSHORE vs. Superior Plus Corp | BW OFFSHORE vs. SIVERS SEMICONDUCTORS AB |
| Ontex Group vs. American Public Education | Ontex Group vs. Automatic Data Processing | Ontex Group vs. Adtalem Global Education | Ontex Group vs. CAREER 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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