Correlation Between BW LPG and Socket Mobile
Can any of the company-specific risk be diversified away by investing in both BW LPG and Socket Mobile 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 Socket Mobile 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 Socket Mobile, you can compare the effects of market volatilities on BW LPG and Socket Mobile 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 Socket Mobile. Check out your portfolio center. Please also check ongoing floating volatility patterns of BW LPG and Socket Mobile.
Diversification Opportunities for BW LPG and Socket Mobile
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between BWLP and Socket is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding BW LPG Limited and Socket Mobile in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Socket Mobile 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 Socket Mobile. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Socket Mobile has no effect on the direction of BW LPG i.e., BW LPG and Socket Mobile go up and down completely randomly.
Pair Corralation between BW LPG and Socket Mobile
Given the investment horizon of 90 days BW LPG Limited is expected to under-perform the Socket Mobile. But the stock apears to be less risky and, when comparing its historical volatility, BW LPG Limited is 1.91 times less risky than Socket Mobile. The stock trades about -0.09 of its potential returns per unit of risk. The Socket Mobile is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 122.00 in Socket Mobile on September 13, 2024 and sell it today you would earn a total of 23.00 from holding Socket Mobile or generate 18.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
BW LPG Limited vs. Socket Mobile
Performance |
| Timeline |
| BW LPG Limited |
| Socket Mobile |
BW LPG and Socket Mobile Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BW LPG and Socket Mobile
The main advantage of trading using opposite BW LPG and Socket Mobile positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BW LPG position performs unexpectedly, Socket Mobile 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 Socket Mobile will offset losses from the drop in Socket Mobile's long position.The idea behind BW LPG Limited and Socket Mobile pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Socket Mobile vs. Cricut Inc | Socket Mobile vs. Nano Dimension | Socket Mobile vs. IONQ Inc | Socket Mobile vs. AGM Group 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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