Correlation Between BW LPG and Hunter Group
Can any of the company-specific risk be diversified away by investing in both BW LPG and Hunter Group 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 Hunter Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BW LPG and Hunter Group ASA, you can compare the effects of market volatilities on BW LPG and Hunter Group 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 Hunter Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of BW LPG and Hunter Group.
Diversification Opportunities for BW LPG and Hunter Group
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between BWLPG and Hunter is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding BW LPG and Hunter Group ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hunter Group ASA 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 Hunter Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hunter Group ASA has no effect on the direction of BW LPG i.e., BW LPG and Hunter Group go up and down completely randomly.
Pair Corralation between BW LPG and Hunter Group
Assuming the 90 days trading horizon BW LPG is expected to generate 0.33 times more return on investment than Hunter Group. However, BW LPG is 3.05 times less risky than Hunter Group. It trades about 0.1 of its potential returns per unit of risk. Hunter Group ASA is currently generating about -0.05 per unit of risk. If you would invest 14,430 in BW LPG on August 25, 2024 and sell it today you would earn a total of 580.00 from holding BW LPG or generate 4.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
BW LPG vs. Hunter Group ASA
Performance |
| Timeline |
| BW LPG |
| Hunter Group ASA |
BW LPG and Hunter Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BW LPG and Hunter Group
The main advantage of trading using opposite BW LPG and Hunter Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BW LPG position performs unexpectedly, Hunter Group 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 Hunter Group will offset losses from the drop in Hunter Group's long position.The idea behind BW LPG and Hunter Group ASA 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.| Hunter Group vs. Okeanis Eco Tankers | Hunter Group vs. Frontline | Hunter Group vs. BW LPG | Hunter Group vs. FLEX LNG |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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