Correlation Between Bowen Acquisition and BW LPG

Can any of the company-specific risk be diversified away by investing in both Bowen Acquisition 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 Bowen Acquisition and BW LPG into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Bowen Acquisition Corp and BW LPG Limited, you can compare the effects of market volatilities on Bowen Acquisition 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 Bowen Acquisition with a short position of BW LPG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bowen Acquisition and BW LPG.

Diversification Opportunities for Bowen Acquisition and BW LPG

-0.33

Correlation Coefficient

Bowen Acquisition  BW LPG

Very good diversification

The 3 months correlation between Bowen and BWLP is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Bowen Acquisition Corp 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 Bowen Acquisition 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 Bowen Acquisition Corp 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 Bowen Acquisition i.e., Bowen Acquisition and BW LPG go up and down completely randomly.

Pair Corralation between Bowen Acquisition and BW LPG

Given the investment horizon of 90 days Bowen Acquisition Corp is expected to under-perform the BW LPG. In addition to that, Bowen Acquisition is 3.41 times more volatile than BW LPG Limited. It trades about -0.2 of its total potential returns per unit of risk. BW LPG Limited is currently generating about 0.18 per unit of volatility. If you would invest  1,085  in BW LPG Limited on October 26, 2024 and sell it today you would earn a total of  99.00  from holding BW LPG Limited or generate 9.12% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Bowen Acquisition Corp  vs.  BW LPG Limited

Bowen Acquisition Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bowen Acquisition Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

BW LPG Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BW LPG Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable essential indicators, BW LPG is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Bowen Acquisition and BW LPG

The main advantage of trading using opposite Bowen Acquisition and BW LPG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bowen Acquisition 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.

The idea behind Bowen Acquisition Corp and BW LPG Limited pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.