Correlation Between BW LPG and Golden Ocean

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

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

Diversification Opportunities for BW LPG and Golden Ocean

0.0

Correlation Coefficient

BW LPG  Golden Ocean

Pay attention - limited upside

The 3 months correlation between BWLLF and Golden is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding BW LPG Limited and Golden Ocean Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Golden Ocean Group and BW LPG 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 BW LPG Limited are associated (or correlated) with Golden Ocean. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Golden Ocean Group has no effect on the direction of BW LPG i.e., BW LPG and Golden Ocean go up and down completely randomly.

Pair Corralation between BW LPG and Golden Ocean

If you would invest (100.00) in BW LPG Limited on December 20, 2024 and sell it today you would earn a total of  100.00  from holding BW LPG Limited or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

BW LPG Limited  vs.  Golden Ocean Group

BW LPG Limited

Risk-Adjusted Performance

Very Weak

Over the last 90 days BW LPG Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable essential indicators, BW LPG is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Golden Ocean Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days Golden Ocean Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's technical and fundamental indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with BW LPG and Golden Ocean

The main advantage of trading using opposite BW LPG and Golden Ocean positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BW LPG position performs unexpectedly, Golden Ocean 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 Golden Ocean will offset losses from the drop in Golden Ocean's long position.

The idea behind BW LPG Limited and Golden Ocean Group 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.