Correlation Between Fanhua and BW LPG
Can any of the company-specific risk be diversified away by investing in both Fanhua 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 Fanhua and BW LPG into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fanhua Inc and BW LPG, you can compare the effects of market volatilities on Fanhua 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 Fanhua with a short position of BW LPG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fanhua and BW LPG.
Diversification Opportunities for Fanhua and BW LPG
Excellent diversification
The 3 months correlation between Fanhua and BWLLY is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Fanhua Inc and BW LPG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BW LPG and Fanhua 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 Fanhua Inc 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 has no effect on the direction of Fanhua i.e., Fanhua and BW LPG go up and down completely randomly.
Pair Corralation between Fanhua and BW LPG
Given the investment horizon of 90 days Fanhua Inc is expected to under-perform the BW LPG. But the stock apears to be less risky and, when comparing its historical volatility, Fanhua Inc is 2.48 times less risky than BW LPG. The stock trades about -0.06 of its potential returns per unit of risk. The BW LPG is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 511.00 in BW LPG on August 31, 2024 and sell it today you would earn a total of 1,043 from holding BW LPG or generate 204.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 81.86% |
| Values | Daily Returns |
Fanhua Inc vs. BW LPG
Performance |
| Timeline |
| Fanhua Inc |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
OK
| BW LPG |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Fanhua and BW LPG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fanhua and BW LPG
The main advantage of trading using opposite Fanhua and BW LPG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fanhua 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.| Fanhua vs. Erie Indemnity | Fanhua vs. Crawford Company | Fanhua vs. Crawford Company | Fanhua vs. CorVel Corp |
| BW LPG vs. Kawasaki Kisen Kaisha | BW LPG vs. Pacific Basin Shipping | BW LPG vs. Hapag Lloyd Aktiengesellschaft | BW LPG vs. Hapag Lloyd Aktiengesellschaft |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
Other Complementary Tools
| Bonds Directory Find actively traded corporate debentures issued by US companies | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments |