Correlation Between Genco Shipping and BW LPG
Can any of the company-specific risk be diversified away by investing in both Genco Shipping 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 Genco Shipping and BW LPG into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Genco Shipping Trading and BW LPG Limited, you can compare the effects of market volatilities on Genco Shipping 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 Genco Shipping with a short position of BW LPG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Genco Shipping and BW LPG.
Diversification Opportunities for Genco Shipping and BW LPG
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Genco and BW9 is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Genco Shipping Trading 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 Genco Shipping 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 Genco Shipping Trading 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 Genco Shipping i.e., Genco Shipping and BW LPG go up and down completely randomly.
Pair Corralation between Genco Shipping and BW LPG
Assuming the 90 days trading horizon Genco Shipping Trading is expected to generate 0.6 times more return on investment than BW LPG. However, Genco Shipping Trading is 1.68 times less risky than BW LPG. It trades about 0.16 of its potential returns per unit of risk. BW LPG Limited is currently generating about 0.04 per unit of risk. If you would invest 1,415 in Genco Shipping Trading on September 4, 2024 and sell it today you would earn a total of 89.00 from holding Genco Shipping Trading or generate 6.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Genco Shipping Trading vs. BW LPG Limited
Performance |
| Timeline |
| Genco Shipping Trading |
| BW LPG Limited |
Genco Shipping and BW LPG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Genco Shipping and BW LPG
The main advantage of trading using opposite Genco Shipping and BW LPG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Genco Shipping 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.| Genco Shipping vs. Wilh Wilhelmsen Holding | Genco Shipping vs. Superior Plus Corp | Genco Shipping vs. NMI Holdings | Genco Shipping vs. Origin Agritech |
| BW LPG vs. Wilh Wilhelmsen Holding | BW LPG vs. Superior Plus Corp | BW LPG vs. NMI Holdings | BW LPG vs. Origin Agritech |
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 Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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