Correlation Between BW LPG and Genco Shipping
Can any of the company-specific risk be diversified away by investing in both BW LPG and Genco Shipping 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 BW LPG and Genco Shipping into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BW LPG Limited and Genco Shipping Trading, you can compare the effects of market volatilities on BW LPG and Genco Shipping 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 BW LPG with a short position of Genco Shipping. Check out your portfolio center. Please also check ongoing floating volatility patterns of BW LPG and Genco Shipping.
Diversification Opportunities for BW LPG and Genco Shipping
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between BW9 and Genco is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding BW LPG Limited and Genco Shipping Trading in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Genco Shipping Trading and BW LPG 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 BW LPG Limited are associated (or correlated) with Genco Shipping. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Genco Shipping Trading has no effect on the direction of BW LPG i.e., BW LPG and Genco Shipping go up and down completely randomly.
Pair Corralation between BW LPG and Genco Shipping
Assuming the 90 days horizon BW LPG Limited is expected to under-perform the Genco Shipping. In addition to that, BW LPG is 1.57 times more volatile than Genco Shipping Trading. It trades about -0.05 of its total potential returns per unit of risk. Genco Shipping Trading is currently generating about 0.02 per unit of volatility. If you would invest 1,488 in Genco Shipping Trading on September 4, 2024 and sell it today you would earn a total of 16.00 from holding Genco Shipping Trading or generate 1.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
BW LPG Limited vs. Genco Shipping Trading
Performance |
| Timeline |
| BW LPG Limited |
| Genco Shipping Trading |
BW LPG and Genco Shipping Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BW LPG and Genco Shipping
The main advantage of trading using opposite BW LPG and Genco Shipping positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BW LPG position performs unexpectedly, Genco Shipping 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 Genco Shipping will offset losses from the drop in Genco Shipping's long position.| BW LPG vs. Wilh Wilhelmsen Holding | BW LPG vs. Superior Plus Corp | BW LPG vs. NMI Holdings | BW LPG vs. Origin Agritech |
| Genco Shipping vs. Wilh Wilhelmsen Holding | Genco Shipping vs. Superior Plus Corp | Genco Shipping vs. NMI Holdings | Genco Shipping vs. Origin Agritech |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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