Correlation Between BW OFFSHORE and X Fab

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Can any of the company-specific risk be diversified away by investing in both BW OFFSHORE and X Fab 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 X Fab 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 X Fab Silicon, you can compare the effects of market volatilities on BW OFFSHORE and X Fab 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 X Fab. Check out your portfolio center. Please also check ongoing floating volatility patterns of BW OFFSHORE and X Fab.

Diversification Opportunities for BW OFFSHORE and X Fab

0.07
  Correlation Coefficient

Significant diversification

The 3 months correlation between XY81 and XFB is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding BW OFFSHORE LTD and X Fab Silicon in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on X Fab Silicon 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 X Fab. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of X Fab Silicon has no effect on the direction of BW OFFSHORE i.e., BW OFFSHORE and X Fab go up and down completely randomly.

Pair Corralation between BW OFFSHORE and X Fab

Assuming the 90 days trading horizon BW OFFSHORE LTD is expected to under-perform the X Fab. In addition to that, BW OFFSHORE is 1.44 times more volatile than X Fab Silicon. It trades about -0.12 of its total potential returns per unit of risk. X Fab Silicon is currently generating about 0.04 per unit of volatility. If you would invest  422.00  in X Fab Silicon on September 6, 2024 and sell it today you would earn a total of  6.00  from holding X Fab Silicon or generate 1.42% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

BW OFFSHORE LTD  vs.  X Fab Silicon

 Performance 
       Timeline  
BW OFFSHORE LTD 

Risk-Adjusted Performance

1 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in BW OFFSHORE LTD are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, BW OFFSHORE is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.
X Fab Silicon 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days X Fab Silicon has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

BW OFFSHORE and X Fab Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with BW OFFSHORE and X Fab

The main advantage of trading using opposite BW OFFSHORE and X Fab positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BW OFFSHORE position performs unexpectedly, X Fab 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 X Fab will offset losses from the drop in X Fab's long position.
The idea behind BW OFFSHORE LTD and X Fab Silicon pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.

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