Correlation Between Napatech and BW Offshore

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

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

Diversification Opportunities for Napatech and BW Offshore

0.58

Correlation Coefficient

Napatech  BW Offshore

Very weak diversification

The 3 months correlation between Napatech and BWO is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Napatech AS and BW Offshore in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BW Offshore and Napatech 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 Napatech AS 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 Napatech i.e., Napatech and BW Offshore go up and down completely randomly.

Pair Corralation between Napatech and BW Offshore

Assuming the 90 days trading horizon Napatech AS is expected to generate 1.46 times more return on investment than BW Offshore. However, Napatech is 1.46 times more volatile than BW Offshore. It trades about 0.17 of its potential returns per unit of risk. BW Offshore is currently generating about 0.16 per unit of risk. If you would invest  1,900  in Napatech AS on April 24, 2025 and sell it today you would earn a total of  625.00  from holding Napatech AS or generate 32.89% return on investment over 90 days.

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

Napatech AS  vs.  BW Offshore

Napatech AS

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Napatech AS are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting essential indicators, Napatech disclosed solid returns over the last few months and may actually be approaching a breakup point.

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.

Pair Trading with Napatech and BW Offshore

The main advantage of trading using opposite Napatech and BW Offshore positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Napatech 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 Napatech AS 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.