Correlation Between AP Mller and BW LPG
Can any of the company-specific risk be diversified away by investing in both AP Mller and BW LPG 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 AP Mller and BW LPG into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AP Mller and BW LPG Limited, you can compare the effects of market volatilities on AP Mller and BW LPG 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 AP Mller with a short position of BW LPG. Check out your portfolio center. Please also check ongoing floating volatility patterns of AP Mller and BW LPG.
Diversification Opportunities for AP Mller and BW LPG
Very good diversification
The 3 months correlation between DP4B and BW9 is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding AP Mller and BW LPG Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BW LPG Limited and AP Mller 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 AP Mller are associated (or correlated) with BW LPG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BW LPG Limited has no effect on the direction of AP Mller i.e., AP Mller and BW LPG go up and down completely randomly.
Pair Corralation between AP Mller and BW LPG
Assuming the 90 days trading horizon AP Mller is expected to generate 0.98 times more return on investment than BW LPG. However, AP Mller is 1.03 times less risky than BW LPG. It trades about 0.17 of its potential returns per unit of risk. BW LPG Limited is currently generating about 0.05 per unit of risk. If you would invest 141,250 in AP Mller on August 29, 2024 and sell it today you would earn a total of 17,000 from holding AP Mller or generate 12.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
AP Mller vs. BW LPG Limited
Performance |
| Timeline |
| AP Mller |
| BW LPG Limited |
AP Mller and BW LPG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AP Mller and BW LPG
The main advantage of trading using opposite AP Mller and BW LPG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AP Mller position performs unexpectedly, BW LPG 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 BW LPG will offset losses from the drop in BW LPG's long position.| AP Mller vs. Highlight Communications AG | AP Mller vs. ALBIS LEASING AG | AP Mller vs. Gamma Communications plc | AP Mller vs. Spirent Communications plc |
| BW LPG vs. ZANAGA IRON ORE | BW LPG vs. NIPPON STEEL SPADR | BW LPG vs. ZURICH INSURANCE GROUP | BW LPG vs. Safety Insurance Group |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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