Correlation Between PennantPark Investment and BW LPG
Can any of the company-specific risk be diversified away by investing in both PennantPark Investment and BW LPG 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 PennantPark Investment and BW LPG into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PennantPark Investment and BW LPG Limited, you can compare the effects of market volatilities on PennantPark Investment and BW LPG 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 PennantPark Investment with a short position of BW LPG. Check out your portfolio center. Please also check ongoing floating volatility patterns of PennantPark Investment and BW LPG.
Diversification Opportunities for PennantPark Investment and BW LPG
-0.14 | Correlation Coefficient |
Good diversification
The 3 months correlation between PennantPark and BW9 is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding PennantPark Investment and BW LPG Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BW LPG Limited and PennantPark Investment 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 PennantPark Investment are associated (or correlated) with BW LPG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BW LPG Limited has no effect on the direction of PennantPark Investment i.e., PennantPark Investment and BW LPG go up and down completely randomly.
Pair Corralation between PennantPark Investment and BW LPG
Assuming the 90 days horizon PennantPark Investment is expected to generate 3.83 times less return on investment than BW LPG. But when comparing it to its historical volatility, PennantPark Investment is 1.25 times less risky than BW LPG. It trades about 0.18 of its potential returns per unit of risk. BW LPG Limited is currently generating about 0.56 of returns per unit of risk over similar time horizon. If you would invest 976.00 in BW LPG Limited on October 21, 2024 and sell it today you would earn a total of 264.00 from holding BW LPG Limited or generate 27.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 94.12% |
| Values | Daily Returns |
PennantPark Investment vs. BW LPG Limited
Performance |
| Timeline |
| PennantPark Investment |
| BW LPG Limited |
PennantPark Investment and BW LPG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PennantPark Investment and BW LPG
The main advantage of trading using opposite PennantPark Investment and BW LPG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PennantPark Investment position performs unexpectedly, BW LPG 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 LPG will offset losses from the drop in BW LPG's long position.| PennantPark Investment vs. DATATEC LTD 2 | PennantPark Investment vs. MICRONIC MYDATA | PennantPark Investment vs. HEMISPHERE EGY | PennantPark Investment vs. COMPUTERSHARE |
| BW LPG vs. AP Mller | BW LPG vs. HAPAG LLOYD UNSPADR 12 | BW LPG vs. ZIM Integrated Shipping | BW LPG vs. DFDS AS |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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