Correlation Between Red Cat and BW LPG
Can any of the company-specific risk be diversified away by investing in both Red Cat 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 Red Cat and BW LPG into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Red Cat Holdings and BW LPG, you can compare the effects of market volatilities on Red Cat 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 Red Cat with a short position of BW LPG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Red Cat and BW LPG.
Diversification Opportunities for Red Cat and BW LPG
Very good diversification
The 3 months correlation between Red and BWLLY is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Red Cat Holdings and BW LPG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BW LPG and Red Cat 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 Red Cat Holdings 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 Red Cat i.e., Red Cat and BW LPG go up and down completely randomly.
Pair Corralation between Red Cat and BW LPG
Given the investment horizon of 90 days Red Cat is expected to generate 1.27 times less return on investment than BW LPG. But when comparing it to its historical volatility, Red Cat Holdings is 1.88 times less risky than BW LPG. It trades about 0.1 of its potential returns per unit of risk. BW LPG is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 868.00 in BW LPG on September 2, 2024 and sell it today you would earn a total of 686.00 from holding BW LPG or generate 79.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 78.23% |
| Values | Daily Returns |
Red Cat Holdings vs. BW LPG
Performance |
| Timeline |
| Red Cat Holdings |
| BW LPG |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Red Cat and BW LPG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Red Cat and BW LPG
The main advantage of trading using opposite Red Cat and BW LPG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Red Cat 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.| Red Cat vs. Quantum Computing | Red Cat vs. Rigetti Computing | Red Cat vs. D Wave Quantum | Red Cat vs. AstroNova |
| 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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