Correlation Between BW Offshore and Acco Brands

Can any of the company-specific risk be diversified away by investing in both BW Offshore and Acco Brands 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 Acco Brands into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between BW Offshore Limited and Acco Brands, you can compare the effects of market volatilities on BW Offshore and Acco Brands 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 Acco Brands. Check out your portfolio center. Please also check ongoing floating volatility patterns of BW Offshore and Acco Brands.

Diversification Opportunities for BW Offshore and Acco Brands

0.36

Correlation Coefficient

BW Offshore  Acco Brands

Weak diversification

The 3 months correlation between BWOFY and Acco is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding BW Offshore Limited and Acco Brands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Acco Brands 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 Limited are associated (or correlated) with Acco Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Acco Brands has no effect on the direction of BW Offshore i.e., BW Offshore and Acco Brands go up and down completely randomly.

Pair Corralation between BW Offshore and Acco Brands

Assuming the 90 days horizon BW Offshore Limited is expected to generate 0.95 times more return on investment than Acco Brands. However, BW Offshore Limited is 1.05 times less risky than Acco Brands. It trades about 0.08 of its potential returns per unit of risk. Acco Brands is currently generating about 0.07 per unit of risk. If you would invest  461.00  in BW Offshore Limited on September 29, 2024 and sell it today you would earn a total of  94.00  from holding BW Offshore Limited or generate 20.39% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

BW Offshore Limited  vs.  Acco Brands

BW Offshore Limited

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in BW Offshore Limited are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak technical and fundamental indicators, BW Offshore may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Acco Brands

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Acco Brands has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy fundamental indicators, Acco Brands is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with BW Offshore and Acco Brands

The main advantage of trading using opposite BW Offshore and Acco Brands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BW Offshore position performs unexpectedly, Acco Brands 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 Acco Brands will offset losses from the drop in Acco Brands' long position.

The idea behind BW Offshore Limited and Acco Brands 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.

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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.