Correlation Between BW LPG and Celsius Holdings
Can any of the company-specific risk be diversified away by investing in both BW LPG and Celsius Holdings 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 Celsius Holdings 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 Celsius Holdings, you can compare the effects of market volatilities on BW LPG and Celsius Holdings 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 Celsius Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of BW LPG and Celsius Holdings.
Diversification Opportunities for BW LPG and Celsius Holdings
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between BWLP and Celsius is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding BW LPG Limited and Celsius Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Celsius Holdings 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 Celsius Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Celsius Holdings has no effect on the direction of BW LPG i.e., BW LPG and Celsius Holdings go up and down completely randomly.
Pair Corralation between BW LPG and Celsius Holdings
Given the investment horizon of 90 days BW LPG Limited is expected to generate 0.84 times more return on investment than Celsius Holdings. However, BW LPG Limited is 1.19 times less risky than Celsius Holdings. It trades about 0.06 of its potential returns per unit of risk. Celsius Holdings is currently generating about -0.02 per unit of risk. If you would invest 710.00 in BW LPG Limited on August 31, 2024 and sell it today you would earn a total of 517.00 from holding BW LPG Limited or generate 72.82% 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. Celsius Holdings
Performance |
| Timeline |
| BW LPG Limited |
| Celsius Holdings |
BW LPG and Celsius Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BW LPG and Celsius Holdings
The main advantage of trading using opposite BW LPG and Celsius Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BW LPG position performs unexpectedly, Celsius Holdings 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 Celsius Holdings will offset losses from the drop in Celsius Holdings' long position.| BW LPG vs. Celsius Holdings | BW LPG vs. PepsiCo | BW LPG vs. Xponential Fitness | BW LPG vs. Northstar Clean Technologies |
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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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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