Correlation Between Havila Shipping and BW Energy
Can any of the company-specific risk be diversified away by investing in both Havila Shipping and BW Energy 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 Havila Shipping and BW Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Havila Shipping ASA and BW Energy, you can compare the effects of market volatilities on Havila Shipping and BW Energy 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 Havila Shipping with a short position of BW Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Havila Shipping and BW Energy.
Diversification Opportunities for Havila Shipping and BW Energy
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Havila and BWE is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Havila Shipping ASA and BW Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BW Energy and Havila 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 Havila Shipping ASA are associated (or correlated) with BW Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BW Energy has no effect on the direction of Havila Shipping i.e., Havila Shipping and BW Energy go up and down completely randomly.
Pair Corralation between Havila Shipping and BW Energy
Assuming the 90 days trading horizon Havila Shipping ASA is expected to under-perform the BW Energy. In addition to that, Havila Shipping is 2.63 times more volatile than BW Energy. It trades about -0.06 of its total potential returns per unit of risk. BW Energy is currently generating about -0.02 per unit of volatility. If you would invest 2,875 in BW Energy on September 12, 2024 and sell it today you would lose (575.00) from holding BW Energy or give up 20.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Havila Shipping ASA vs. BW Energy
Performance |
| Timeline |
| Havila Shipping ASA |
| BW Energy |
Havila Shipping and BW Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Havila Shipping and BW Energy
The main advantage of trading using opposite Havila Shipping and BW Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Havila Shipping position performs unexpectedly, BW Energy 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 Energy will offset losses from the drop in BW Energy's long position.| Havila Shipping vs. Solstad Offsho | Havila Shipping vs. Prosafe SE | Havila Shipping vs. BW Offshore | Havila Shipping vs. Kongsberg Gruppen ASA |
| BW Energy vs. BW Offshore | BW Energy vs. Panoro Energy ASA | BW Energy vs. Aker BP ASA | BW Energy vs. BW LPG |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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