Correlation Between BW LPG and ZIM Integrated
Can any of the company-specific risk be diversified away by investing in both BW LPG and ZIM Integrated 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 ZIM Integrated into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BW LPG and ZIM Integrated Shipping, you can compare the effects of market volatilities on BW LPG and ZIM Integrated 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 ZIM Integrated. Check out your portfolio center. Please also check ongoing floating volatility patterns of BW LPG and ZIM Integrated.
Diversification Opportunities for BW LPG and ZIM Integrated
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between BWLLY and ZIM is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding BW LPG and ZIM Integrated Shipping in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ZIM Integrated Shipping 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 are associated (or correlated) with ZIM Integrated. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ZIM Integrated Shipping has no effect on the direction of BW LPG i.e., BW LPG and ZIM Integrated go up and down completely randomly.
Pair Corralation between BW LPG and ZIM Integrated
Assuming the 90 days horizon BW LPG is expected to generate 3.51 times less return on investment than ZIM Integrated. But when comparing it to its historical volatility, BW LPG is 1.26 times less risky than ZIM Integrated. It trades about 0.04 of its potential returns per unit of risk. ZIM Integrated Shipping is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 578.00 in ZIM Integrated Shipping on September 3, 2024 and sell it today you would earn a total of 1,403 from holding ZIM Integrated Shipping or generate 242.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 63.97% |
| Values | Daily Returns |
BW LPG vs. ZIM Integrated Shipping
Performance |
| Timeline |
| BW LPG |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| ZIM Integrated Shipping |
BW LPG and ZIM Integrated Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BW LPG and ZIM Integrated
The main advantage of trading using opposite BW LPG and ZIM Integrated positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BW LPG position performs unexpectedly, ZIM Integrated 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 ZIM Integrated will offset losses from the drop in ZIM Integrated's long position.| BW LPG vs. Kawasaki Kisen Kaisha | BW LPG vs. Pacific Basin Shipping | BW LPG vs. Hapag Lloyd Aktiengesellschaft | BW LPG vs. Hapag Lloyd Aktiengesellschaft |
| ZIM Integrated vs. Golden Ocean Group | ZIM Integrated vs. Genco Shipping Trading | ZIM Integrated vs. Global Ship Lease | ZIM Integrated vs. Diana Shipping |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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