Correlation Between Oceanpal and BW LPG
Can any of the company-specific risk be diversified away by investing in both Oceanpal 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 Oceanpal and BW LPG into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Oceanpal and BW LPG Limited, you can compare the effects of market volatilities on Oceanpal 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 Oceanpal with a short position of BW LPG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Oceanpal and BW LPG.
Diversification Opportunities for Oceanpal and BW LPG
Modest diversification
The 3 months correlation between Oceanpal and BWLP is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Oceanpal 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 Oceanpal 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 Oceanpal 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 Oceanpal i.e., Oceanpal and BW LPG go up and down completely randomly.
Pair Corralation between Oceanpal and BW LPG
Allowing for the 90-day total investment horizon Oceanpal is expected to under-perform the BW LPG. In addition to that, Oceanpal is 1.05 times more volatile than BW LPG Limited. It trades about -0.09 of its total potential returns per unit of risk. BW LPG Limited is currently generating about 0.03 per unit of volatility. If you would invest 1,271 in BW LPG Limited on November 2, 2024 and sell it today you would earn a total of 69.00 from holding BW LPG Limited or generate 5.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Oceanpal vs. BW LPG Limited
Performance |
| Timeline |
| Oceanpal |
| BW LPG Limited |
Oceanpal and BW LPG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Oceanpal and BW LPG
The main advantage of trading using opposite Oceanpal and BW LPG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Oceanpal 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.| Oceanpal vs. Genco Shipping Trading | Oceanpal vs. Golden Ocean Group | Oceanpal vs. Star Bulk Carriers | Oceanpal vs. TOP Ships |
| BW LPG vs. Amkor Technology | BW LPG vs. Teradyne | BW LPG vs. Virgin Group Acquisition | BW LPG vs. Inter Parfums |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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