Correlation Between Tower One and BW Offshore

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

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

Diversification Opportunities for Tower One and BW Offshore

0.0

Correlation Coefficient

Tower One  BW Offshore

Pay attention - limited upside

The 3 months correlation between Tower and BWOFY is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Tower One Wireless and BW Offshore Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BW Offshore Limited and Tower One 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 Tower One Wireless 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 Limited has no effect on the direction of Tower One i.e., Tower One and BW Offshore go up and down completely randomly.

Pair Corralation between Tower One and BW Offshore

Assuming the 90 days horizon Tower One Wireless is expected to generate 32.39 times more return on investment than BW Offshore. However, Tower One is 32.39 times more volatile than BW Offshore Limited. It trades about 0.04 of its potential returns per unit of risk. BW Offshore Limited is currently generating about 0.04 per unit of risk. If you would invest  5.33  in Tower One Wireless on September 14, 2024 and sell it today you would lose (5.32) from holding Tower One Wireless or give up 99.81% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	79.55%
Values	Daily Returns

Tower One Wireless  vs.  BW Offshore Limited

Tower One Wireless

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tower One Wireless has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Tower One is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

BW Offshore Limited

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in BW Offshore Limited are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly conflicting technical and fundamental indicators, BW Offshore showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Tower One and BW Offshore

The main advantage of trading using opposite Tower One and BW Offshore positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tower One 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 Tower One Wireless and BW Offshore Limited 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.