Correlation Between BW Offshore and Eastern

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

Diversification Opportunities for BW Offshore and Eastern

-0.33

Correlation Coefficient

BW Offshore  Eastern

Very good diversification

The 3 months correlation between BWOFY and Eastern is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding BW Offshore Limited and Eastern Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eastern 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 Eastern. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eastern has no effect on the direction of BW Offshore i.e., BW Offshore and Eastern go up and down completely randomly.

Pair Corralation between BW Offshore and Eastern

Assuming the 90 days horizon BW Offshore Limited is expected to generate 0.86 times more return on investment than Eastern. However, BW Offshore Limited is 1.16 times less risky than Eastern. It trades about 0.0 of its potential returns per unit of risk. Eastern Co is currently generating about 0.0 per unit of risk. If you would invest  560.00  in BW Offshore Limited on September 18, 2024 and sell it today you would lose (5.00) from holding BW Offshore Limited or give up 0.89% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

BW Offshore Limited  vs.  Eastern Co

BW Offshore Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BW Offshore Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong technical and fundamental indicators, BW Offshore is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Eastern

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Eastern Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent primary indicators, Eastern is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with BW Offshore and Eastern

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

The idea behind BW Offshore Limited and Eastern Co 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.