Correlation Between Orient Overseas and BW LPG
Can any of the company-specific risk be diversified away by investing in both Orient Overseas 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 Orient Overseas and BW LPG into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Orient Overseas Limited and BW LPG Limited, you can compare the effects of market volatilities on Orient Overseas 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 Orient Overseas with a short position of BW LPG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Orient Overseas and BW LPG.
Diversification Opportunities for Orient Overseas and BW LPG
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Orient and BWLLF is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Orient Overseas Limited 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 Orient Overseas 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 Orient Overseas Limited 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 Orient Overseas i.e., Orient Overseas and BW LPG go up and down completely randomly.
Pair Corralation between Orient Overseas and BW LPG
Assuming the 90 days horizon Orient Overseas Limited is expected to generate 1.49 times more return on investment than BW LPG. However, Orient Overseas is 1.49 times more volatile than BW LPG Limited. It trades about 0.07 of its potential returns per unit of risk. BW LPG Limited is currently generating about 0.07 per unit of risk. If you would invest 1,762 in Orient Overseas Limited on September 2, 2024 and sell it today you would lose (465.00) from holding Orient Overseas Limited or give up 26.39% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 89.76% |
| Values | Daily Returns |
Orient Overseas Limited vs. BW LPG Limited
Performance |
| Timeline |
| Orient Overseas |
| BW LPG Limited |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Orient Overseas and BW LPG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Orient Overseas and BW LPG
The main advantage of trading using opposite Orient Overseas and BW LPG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Orient Overseas 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.| Orient Overseas vs. SITC International Holdings | Orient Overseas vs. COSCO SHIPPING Holdings | Orient Overseas vs. Pacific Basin Shipping | Orient Overseas vs. Mitsui OSK Lines |
| BW LPG vs. Hutchison Port Holdings | BW LPG vs. Kawasaki Kisen Kaisha | BW LPG vs. MPC Container Ships | 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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