Correlation Between Zegona Communications and BW Offshore
Can any of the company-specific risk be diversified away by investing in both Zegona Communications and BW Offshore 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 Zegona Communications and BW Offshore into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Zegona Communications Plc and BW Offshore, you can compare the effects of market volatilities on Zegona Communications and BW Offshore 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 Zegona Communications with a short position of BW Offshore. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zegona Communications and BW Offshore.
Diversification Opportunities for Zegona Communications and BW Offshore
-0.04 | Correlation Coefficient |
Good diversification
The 3 months correlation between Zegona and 0RKH is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Zegona Communications Plc and BW Offshore in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BW Offshore and Zegona Communications 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 Zegona Communications Plc are associated (or correlated) with BW Offshore. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BW Offshore has no effect on the direction of Zegona Communications i.e., Zegona Communications and BW Offshore go up and down completely randomly.
Pair Corralation between Zegona Communications and BW Offshore
Assuming the 90 days trading horizon Zegona Communications Plc is expected to generate 0.87 times more return on investment than BW Offshore. However, Zegona Communications Plc is 1.15 times less risky than BW Offshore. It trades about 0.11 of its potential returns per unit of risk. BW Offshore is currently generating about -0.12 per unit of risk. If you would invest 33,000 in Zegona Communications Plc on August 30, 2024 and sell it today you would earn a total of 2,000 from holding Zegona Communications Plc or generate 6.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Zegona Communications Plc vs. BW Offshore
Performance |
| Timeline |
| Zegona Communications Plc |
| BW Offshore |
Zegona Communications and BW Offshore Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Zegona Communications and BW Offshore
The main advantage of trading using opposite Zegona Communications and BW Offshore positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zegona Communications position performs unexpectedly, BW Offshore 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 BW Offshore will offset losses from the drop in BW Offshore's long position.| Zegona Communications vs. Walmart | Zegona Communications vs. BYD Co | Zegona Communications vs. Volkswagen AG | Zegona Communications vs. Volkswagen AG Non Vtg |
| BW Offshore vs. Lendinvest PLC | BW Offshore vs. Neometals | BW Offshore vs. Albion Technology General | BW Offshore vs. Jupiter Fund Management |
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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