Correlation Between Seadrill and Orbit Garant

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

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

Diversification Opportunities for Seadrill and Orbit Garant

-0.48

Correlation Coefficient

Seadrill  Orbit Garant

Very good diversification

The 3 months correlation between Seadrill and Orbit is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Seadrill Limited and Orbit Garant Drilling in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Orbit Garant Drilling and Seadrill 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 Seadrill Limited are associated (or correlated) with Orbit Garant. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Orbit Garant Drilling has no effect on the direction of Seadrill i.e., Seadrill and Orbit Garant go up and down completely randomly.

Pair Corralation between Seadrill and Orbit Garant

Given the investment horizon of 90 days Seadrill Limited is expected to generate 2.38 times more return on investment than Orbit Garant. However, Seadrill is 2.38 times more volatile than Orbit Garant Drilling. It trades about 0.27 of its potential returns per unit of risk. Orbit Garant Drilling is currently generating about 0.36 per unit of risk. If you would invest  2,088  in Seadrill Limited on February 16, 2025 and sell it today you would earn a total of  333.00  from holding Seadrill Limited or generate 15.95% return on investment over 90 days.

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

Seadrill Limited  vs.  Orbit Garant Drilling

Seadrill Limited

Risk-Adjusted Performance

Very Weak

Over the last 90 days Seadrill Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in June 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Orbit Garant Drilling

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Orbit Garant Drilling are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Orbit Garant reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Seadrill and Orbit Garant

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

The idea behind Seadrill Limited and Orbit Garant Drilling 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.