Correlation Between Superior Plus and BW LPG
Can any of the company-specific risk be diversified away by investing in both Superior Plus 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 Superior Plus and BW LPG into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Superior Plus Corp and BW LPG Limited, you can compare the effects of market volatilities on Superior Plus 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 Superior Plus with a short position of BW LPG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Superior Plus and BW LPG.
Diversification Opportunities for Superior Plus and BW LPG
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Superior and BW9 is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Superior Plus Corp 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 Superior Plus 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 Superior Plus Corp 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 Superior Plus i.e., Superior Plus and BW LPG go up and down completely randomly.
Pair Corralation between Superior Plus and BW LPG
Assuming the 90 days horizon Superior Plus Corp is expected to generate 1.24 times more return on investment than BW LPG. However, Superior Plus is 1.24 times more volatile than BW LPG Limited. It trades about -0.02 of its potential returns per unit of risk. BW LPG Limited is currently generating about -0.09 per unit of risk. If you would invest 480.00 in Superior Plus Corp on September 12, 2024 and sell it today you would lose (40.00) from holding Superior Plus Corp or give up 8.33% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 98.44% |
| Values | Daily Returns |
Superior Plus Corp vs. BW LPG Limited
Performance |
| Timeline |
| Superior Plus Corp |
| BW LPG Limited |
Superior Plus and BW LPG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Superior Plus and BW LPG
The main advantage of trading using opposite Superior Plus and BW LPG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Superior Plus 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.| Superior Plus vs. HF SINCLAIR P | Superior Plus vs. PT Indofood Sukses | Superior Plus vs. SENECA FOODS A | Superior Plus vs. ScanSource |
| BW LPG vs. Xenia Hotels Resorts | BW LPG vs. PennantPark Investment | BW LPG vs. Postal Savings Bank | BW LPG vs. MHP Hotel AG |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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