Correlation Between BW OFFSHORE and Johnson Johnson

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

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

Diversification Opportunities for BW OFFSHORE and Johnson Johnson

-0.05

Correlation Coefficient

BW OFFSHORE  Johnson Johnson

Good diversification

The 3 months correlation between XY81 and Johnson is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding BW OFFSHORE LTD and Johnson Johnson in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Johnson Johnson 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 LTD are associated (or correlated) with Johnson Johnson. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Johnson Johnson has no effect on the direction of BW OFFSHORE i.e., BW OFFSHORE and Johnson Johnson go up and down completely randomly.

Pair Corralation between BW OFFSHORE and Johnson Johnson

Assuming the 90 days trading horizon BW OFFSHORE LTD is expected to generate 2.06 times more return on investment than Johnson Johnson. However, BW OFFSHORE is 2.06 times more volatile than Johnson Johnson. It trades about 0.14 of its potential returns per unit of risk. Johnson Johnson is currently generating about 0.06 per unit of risk. If you would invest  231.00  in BW OFFSHORE LTD on April 24, 2025 and sell it today you would earn a total of  52.00  from holding BW OFFSHORE LTD or generate 22.51% return on investment over 90 days.

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

BW OFFSHORE LTD  vs.  Johnson Johnson

BW OFFSHORE LTD

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in BW OFFSHORE LTD are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, BW OFFSHORE reported solid returns over the last few months and may actually be approaching a breakup point.

Johnson Johnson

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Johnson Johnson are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Johnson Johnson is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with BW OFFSHORE and Johnson Johnson

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

The idea behind BW OFFSHORE LTD and Johnson Johnson 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.