Correlation Between Vestis and BW LPG
Can any of the company-specific risk be diversified away by investing in both Vestis 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 Vestis and BW LPG into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vestis and BW LPG Limited, you can compare the effects of market volatilities on Vestis 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 Vestis with a short position of BW LPG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vestis and BW LPG.
Diversification Opportunities for Vestis and BW LPG
Good diversification
The 3 months correlation between Vestis and BWLP is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Vestis 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 Vestis 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 Vestis 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 Vestis i.e., Vestis and BW LPG go up and down completely randomly.
Pair Corralation between Vestis and BW LPG
Given the investment horizon of 90 days Vestis is expected to generate 5.24 times less return on investment than BW LPG. In addition to that, Vestis is 1.13 times more volatile than BW LPG Limited. It trades about 0.01 of its total potential returns per unit of risk. BW LPG Limited is currently generating about 0.06 per unit of volatility. If you would invest 529.00 in BW LPG Limited on September 12, 2024 and sell it today you would earn a total of 648.00 from holding BW LPG Limited or generate 122.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 61.62% |
| Values | Daily Returns |
Vestis vs. BW LPG Limited
Performance |
| Timeline |
| Vestis |
| BW LPG Limited |
Vestis and BW LPG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vestis and BW LPG
The main advantage of trading using opposite Vestis and BW LPG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vestis 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.| Vestis vs. Ryder System | Vestis vs. Air Lease | Vestis vs. Willis Lease Finance | Vestis vs. AerCap Holdings NV |
| BW LPG vs. Avis Budget Group | BW LPG vs. Asure Software | BW LPG vs. Iridium Communications | BW LPG vs. Vestis |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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