Correlation Between Arm Holdings and BW LPG
Can any of the company-specific risk be diversified away by investing in both Arm Holdings 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 Arm Holdings and BW LPG into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Arm Holdings plc and BW LPG Limited, you can compare the effects of market volatilities on Arm Holdings 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 Arm Holdings with a short position of BW LPG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arm Holdings and BW LPG.
Diversification Opportunities for Arm Holdings and BW LPG
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Arm and BWLP is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Arm Holdings plc 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 Arm Holdings 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 Arm Holdings plc 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 Arm Holdings i.e., Arm Holdings and BW LPG go up and down completely randomly.
Pair Corralation between Arm Holdings and BW LPG
Considering the 90-day investment horizon Arm Holdings plc is expected to generate 1.67 times more return on investment than BW LPG. However, Arm Holdings is 1.67 times more volatile than BW LPG Limited. It trades about 0.09 of its potential returns per unit of risk. BW LPG Limited is currently generating about 0.0 per unit of risk. If you would invest 5,868 in Arm Holdings plc on September 14, 2024 and sell it today you would earn a total of 9,323 from holding Arm Holdings plc or generate 158.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Arm Holdings plc vs. BW LPG Limited
Performance |
| Timeline |
| Arm Holdings plc |
| BW LPG Limited |
Arm Holdings and BW LPG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Arm Holdings and BW LPG
The main advantage of trading using opposite Arm Holdings and BW LPG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Arm Holdings 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.| Arm Holdings vs. ON Semiconductor | Arm Holdings vs. Globalfoundries | Arm Holdings vs. Wisekey International Holding | Arm Holdings vs. Nano Labs |
| BW LPG vs. Arm Holdings plc | BW LPG vs. Valens | BW LPG vs. Elmos Semiconductor SE | BW LPG vs. Western Copper and |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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