Correlation Between BW LPG and Procter Gamble
Can any of the company-specific risk be diversified away by investing in both BW LPG and Procter Gamble 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 Procter Gamble 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 Procter Gamble, you can compare the effects of market volatilities on BW LPG and Procter Gamble 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 Procter Gamble. Check out your portfolio center. Please also check ongoing floating volatility patterns of BW LPG and Procter Gamble.
Diversification Opportunities for BW LPG and Procter Gamble
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between BWLP and Procter is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding BW LPG Limited and Procter Gamble in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Procter Gamble 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 Procter Gamble. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Procter Gamble has no effect on the direction of BW LPG i.e., BW LPG and Procter Gamble go up and down completely randomly.
Pair Corralation between BW LPG and Procter Gamble
Given the investment horizon of 90 days BW LPG Limited is expected to under-perform the Procter Gamble. In addition to that, BW LPG is 2.53 times more volatile than Procter Gamble. It trades about -0.08 of its total potential returns per unit of risk. Procter Gamble is currently generating about 0.06 per unit of volatility. If you would invest 17,350 in Procter Gamble on September 3, 2024 and sell it today you would earn a total of 576.00 from holding Procter Gamble or generate 3.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BW LPG Limited vs. Procter Gamble
Performance |
| Timeline |
| BW LPG Limited |
| Procter Gamble |
BW LPG and Procter Gamble Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BW LPG and Procter Gamble
The main advantage of trading using opposite BW LPG and Procter Gamble positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BW LPG position performs unexpectedly, Procter Gamble 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 Procter Gamble will offset losses from the drop in Procter Gamble's long position.| BW LPG vs. International Seaways | BW LPG vs. Scorpio Tankers | BW LPG vs. Dorian LPG | BW LPG vs. Teekay Tankers |
| Procter Gamble vs. Highway Holdings Limited | Procter Gamble vs. QCR Holdings | Procter Gamble vs. Partner Communications | Procter Gamble vs. Acumen Pharmaceuticals |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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