Correlation Between Safety Insurance and BW LPG
Can any of the company-specific risk be diversified away by investing in both Safety Insurance 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 Safety Insurance and BW LPG into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Safety Insurance Group and BW LPG Limited, you can compare the effects of market volatilities on Safety Insurance 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 Safety Insurance with a short position of BW LPG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Safety Insurance and BW LPG.
Diversification Opportunities for Safety Insurance and BW LPG
-0.29 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Safety and BW9 is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Safety Insurance Group 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 Safety Insurance 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 Safety Insurance Group 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 Safety Insurance i.e., Safety Insurance and BW LPG go up and down completely randomly.
Pair Corralation between Safety Insurance and BW LPG
Assuming the 90 days horizon Safety Insurance is expected to generate 1.02 times less return on investment than BW LPG. But when comparing it to its historical volatility, Safety Insurance Group is 2.2 times less risky than BW LPG. It trades about 0.05 of its potential returns per unit of risk. BW LPG Limited is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 1,095 in BW LPG Limited on September 1, 2024 and sell it today you would earn a total of 66.00 from holding BW LPG Limited or generate 6.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Safety Insurance Group vs. BW LPG Limited
Performance |
| Timeline |
| Safety Insurance |
| BW LPG Limited |
Safety Insurance and BW LPG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Safety Insurance and BW LPG
The main advantage of trading using opposite Safety Insurance and BW LPG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Safety Insurance 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.| Safety Insurance vs. The Progressive | Safety Insurance vs. Fairfax Financial Holdings | Safety Insurance vs. Insurance Australia Group |
| BW LPG vs. Singapore Telecommunications Limited | BW LPG vs. Internet Thailand PCL | BW LPG vs. KRISPY KREME DL 01 | BW LPG vs. REGAL ASIAN INVESTMENTS |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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