Correlation Between ZANAGA IRON and BW LPG
Can any of the company-specific risk be diversified away by investing in both ZANAGA IRON 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 ZANAGA IRON and BW LPG into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ZANAGA IRON ORE and BW LPG Limited, you can compare the effects of market volatilities on ZANAGA IRON 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 ZANAGA IRON with a short position of BW LPG. Check out your portfolio center. Please also check ongoing floating volatility patterns of ZANAGA IRON and BW LPG.
Diversification Opportunities for ZANAGA IRON and BW LPG
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between ZANAGA and BW9 is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding ZANAGA IRON ORE 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 ZANAGA IRON 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 ZANAGA IRON ORE 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 ZANAGA IRON i.e., ZANAGA IRON and BW LPG go up and down completely randomly.
Pair Corralation between ZANAGA IRON and BW LPG
Assuming the 90 days trading horizon ZANAGA IRON ORE is expected to generate 1.94 times more return on investment than BW LPG. However, ZANAGA IRON is 1.94 times more volatile than BW LPG Limited. It trades about 0.12 of its potential returns per unit of risk. BW LPG Limited is currently generating about 0.13 per unit of risk. If you would invest 8.30 in ZANAGA IRON ORE on November 27, 2024 and sell it today you would earn a total of 1.15 from holding ZANAGA IRON ORE or generate 13.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.24% |
| Values | Daily Returns |
ZANAGA IRON ORE vs. BW LPG Limited
Performance |
| Timeline |
| ZANAGA IRON ORE |
| BW LPG Limited |
ZANAGA IRON and BW LPG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ZANAGA IRON and BW LPG
The main advantage of trading using opposite ZANAGA IRON and BW LPG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ZANAGA IRON 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.| ZANAGA IRON vs. Apple Inc | ZANAGA IRON vs. Apple Inc | ZANAGA IRON vs. Apple Inc | ZANAGA IRON vs. Apple Inc |
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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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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