Correlation Between JABHOL and Seadrill

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

By analyzing existing cross correlation between JABHOL 22 23 NOV 30 and Seadrill Limited, you can compare the effects of market volatilities on JABHOL and Seadrill 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 JABHOL with a short position of Seadrill. Check out your portfolio center. Please also check ongoing floating volatility patterns of JABHOL and Seadrill.

Diversification Opportunities for JABHOL and Seadrill

-0.03

Correlation Coefficient

JABHOL  Seadrill

Good diversification

The 3 months correlation between JABHOL and Seadrill is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding JABHOL 22 23 NOV 30 and Seadrill Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Seadrill Limited and JABHOL 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 JABHOL 22 23 NOV 30 are associated (or correlated) with Seadrill. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Seadrill Limited has no effect on the direction of JABHOL i.e., JABHOL and Seadrill go up and down completely randomly.

Pair Corralation between JABHOL and Seadrill

Assuming the 90 days trading horizon JABHOL 22 23 NOV 30 is expected to under-perform the Seadrill. In addition to that, JABHOL is 1.9 times more volatile than Seadrill Limited. It trades about -0.34 of its total potential returns per unit of risk. Seadrill Limited is currently generating about -0.23 per unit of volatility. If you would invest  4,068  in Seadrill Limited on September 21, 2024 and sell it today you would lose (391.50) from holding Seadrill Limited or give up 9.62% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	27.27%
Values	Daily Returns

JABHOL 22 23 NOV 30  vs.  Seadrill Limited

JABHOL 22 23

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days JABHOL 22 23 NOV 30 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Bond's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for JABHOL 22 23 NOV 30 investors.

Seadrill Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Seadrill Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unfluctuating performance, the Stock's basic indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with JABHOL and Seadrill

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

The idea behind JABHOL 22 23 NOV 30 and Seadrill 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.