Correlation Between BW Offshore and Golden Energy

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

By analyzing existing cross correlation between BW Offshore and Golden Energy Offshore, you can compare the effects of market volatilities on BW Offshore and Golden Energy 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 Golden Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of BW Offshore and Golden Energy.

Diversification Opportunities for BW Offshore and Golden Energy

0.4

Correlation Coefficient

BW Offshore  Golden Energy

Very weak diversification

The 3 months correlation between BWO and Golden is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding BW Offshore and Golden Energy Offshore in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Golden Energy Offshore 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 are associated (or correlated) with Golden Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Golden Energy Offshore has no effect on the direction of BW Offshore i.e., BW Offshore and Golden Energy go up and down completely randomly.

Pair Corralation between BW Offshore and Golden Energy

Assuming the 90 days trading horizon BW Offshore is expected to generate 0.66 times more return on investment than Golden Energy. However, BW Offshore is 1.51 times less risky than Golden Energy. It trades about 0.16 of its potential returns per unit of risk. Golden Energy Offshore is currently generating about 0.09 per unit of risk. If you would invest  2,777  in BW Offshore on April 24, 2025 and sell it today you would earn a total of  583.00  from holding BW Offshore or generate 20.99% return on investment over 90 days.

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

BW Offshore  vs.  Golden Energy Offshore

BW Offshore

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in BW Offshore are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, BW Offshore disclosed solid returns over the last few months and may actually be approaching a breakup point.

Golden Energy Offshore

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Golden Energy Offshore are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite quite weak essential indicators, Golden Energy disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with BW Offshore and Golden Energy

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

The idea behind BW Offshore and Golden Energy 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.

Check out your portfolio center.

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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.