Correlation Between Postal Savings and BW LPG
Can any of the company-specific risk be diversified away by investing in both Postal Savings 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 Postal Savings and BW LPG into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Postal Savings Bank and BW LPG Limited, you can compare the effects of market volatilities on Postal Savings 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 Postal Savings with a short position of BW LPG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Postal Savings and BW LPG.
Diversification Opportunities for Postal Savings and BW LPG
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Postal and BW9 is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Postal Savings Bank 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 Postal Savings 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 Postal Savings Bank 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 Postal Savings i.e., Postal Savings and BW LPG go up and down completely randomly.
Pair Corralation between Postal Savings and BW LPG
Assuming the 90 days horizon Postal Savings Bank is expected to generate 0.48 times more return on investment than BW LPG. However, Postal Savings Bank is 2.06 times less risky than BW LPG. It trades about 0.07 of its potential returns per unit of risk. BW LPG Limited is currently generating about -0.11 per unit of risk. If you would invest 53.00 in Postal Savings Bank on September 13, 2024 and sell it today you would earn a total of 1.00 from holding Postal Savings Bank or generate 1.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Postal Savings Bank vs. BW LPG Limited
Performance |
| Timeline |
| Postal Savings Bank |
| BW LPG Limited |
Postal Savings and BW LPG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Postal Savings and BW LPG
The main advantage of trading using opposite Postal Savings and BW LPG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Postal Savings 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.| Postal Savings vs. POSBO UNSPADRS20YC1 | Postal Savings vs. UTD OV BK LOC ADR1 | Postal Savings vs. Superior Plus Corp | Postal Savings vs. SIVERS SEMICONDUCTORS AB |
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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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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