Correlation Between Sabien Technology and BW Offshore

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

By analyzing existing cross correlation between Sabien Technology Group and BW Offshore, you can compare the effects of market volatilities on Sabien Technology 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 Sabien Technology with a short position of BW Offshore. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sabien Technology and BW Offshore.

Diversification Opportunities for Sabien Technology and BW Offshore

0.62

Correlation Coefficient

Sabien Technology  BW Offshore

Poor diversification

The 3 months correlation between Sabien and 0RKH is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Sabien Technology Group and BW Offshore in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BW Offshore and Sabien Technology 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 Sabien Technology Group 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 Sabien Technology i.e., Sabien Technology and BW Offshore go up and down completely randomly.

Pair Corralation between Sabien Technology and BW Offshore

Assuming the 90 days trading horizon Sabien Technology Group is expected to generate 1.62 times more return on investment than BW Offshore. However, Sabien Technology is 1.62 times more volatile than BW Offshore. It trades about 0.16 of its potential returns per unit of risk. BW Offshore is currently generating about 0.05 per unit of risk. If you would invest  750.00  in Sabien Technology Group on September 16, 2024 and sell it today you would earn a total of  350.00  from holding Sabien Technology Group or generate 46.67% return on investment over 90 days.

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

Sabien Technology Group  vs.  BW Offshore

Sabien Technology

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Sabien Technology Group are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Sabien Technology exhibited solid returns over the last few months and may actually be approaching a breakup point.

BW Offshore

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in BW Offshore are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, BW Offshore may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Sabien Technology and BW Offshore

The main advantage of trading using opposite Sabien Technology and BW Offshore positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sabien Technology 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.

The idea behind Sabien Technology Group and BW Offshore 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.