Correlation Between BW LPG and NIPPON STEEL
Can any of the company-specific risk be diversified away by investing in both BW LPG and NIPPON STEEL 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 NIPPON STEEL 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 NIPPON STEEL SPADR, you can compare the effects of market volatilities on BW LPG and NIPPON STEEL 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 NIPPON STEEL. Check out your portfolio center. Please also check ongoing floating volatility patterns of BW LPG and NIPPON STEEL.
Diversification Opportunities for BW LPG and NIPPON STEEL
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between BW9 and NIPPON is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding BW LPG Limited and NIPPON STEEL SPADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NIPPON STEEL SPADR 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 NIPPON STEEL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NIPPON STEEL SPADR has no effect on the direction of BW LPG i.e., BW LPG and NIPPON STEEL go up and down completely randomly.
Pair Corralation between BW LPG and NIPPON STEEL
Assuming the 90 days horizon BW LPG Limited is expected to under-perform the NIPPON STEEL. In addition to that, BW LPG is 2.41 times more volatile than NIPPON STEEL SPADR. It trades about -0.02 of its total potential returns per unit of risk. NIPPON STEEL SPADR is currently generating about 0.12 per unit of volatility. If you would invest 595.00 in NIPPON STEEL SPADR on September 1, 2024 and sell it today you would earn a total of 20.00 from holding NIPPON STEEL SPADR or generate 3.36% 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. NIPPON STEEL SPADR
Performance |
| Timeline |
| BW LPG Limited |
| NIPPON STEEL SPADR |
BW LPG and NIPPON STEEL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BW LPG and NIPPON STEEL
The main advantage of trading using opposite BW LPG and NIPPON STEEL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BW LPG position performs unexpectedly, NIPPON STEEL 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 NIPPON STEEL will offset losses from the drop in NIPPON STEEL's long position.| BW LPG vs. Singapore Telecommunications Limited | BW LPG vs. Internet Thailand PCL | BW LPG vs. KRISPY KREME DL 01 | BW LPG vs. REGAL ASIAN INVESTMENTS |
| NIPPON STEEL vs. BANKINTER ADR 2007 | NIPPON STEEL vs. Regions Financial | NIPPON STEEL vs. OAKTRSPECLENDNEW | NIPPON STEEL vs. National Bank Holdings |
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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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