Correlation Between Aban Offshore and Dev Information

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

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

Diversification Opportunities for Aban Offshore and Dev Information

0.39

Correlation Coefficient

Aban Offshore  Dev Information

Weak diversification

The 3 months correlation between Aban and Dev is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Aban Offshore Limited and Dev Information Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dev Information Tech and Aban 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 Aban Offshore Limited are associated (or correlated) with Dev Information. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dev Information Tech has no effect on the direction of Aban Offshore i.e., Aban Offshore and Dev Information go up and down completely randomly.

Pair Corralation between Aban Offshore and Dev Information

Assuming the 90 days trading horizon Aban Offshore Limited is expected to generate 1.13 times more return on investment than Dev Information. However, Aban Offshore is 1.13 times more volatile than Dev Information Technology. It trades about 0.14 of its potential returns per unit of risk. Dev Information Technology is currently generating about -0.01 per unit of risk. If you would invest  4,041  in Aban Offshore Limited on April 20, 2025 and sell it today you would earn a total of  991.00  from holding Aban Offshore Limited or generate 24.52% return on investment over 90 days.

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

Aban Offshore Limited  vs.  Dev Information Technology

Aban Offshore Limited

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Aban Offshore Limited are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively inconsistent basic indicators, Aban Offshore unveiled solid returns over the last few months and may actually be approaching a breakup point.

Dev Information Tech

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Aban Offshore and Dev Information

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

The idea behind Aban Offshore Limited and Dev Information Technology 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.