Correlation Between BW LPG and SITC International

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

By analyzing existing cross correlation between BW LPG and SITC International Holdings, you can compare the effects of market volatilities on BW LPG and SITC International 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 SITC International. Check out your portfolio center. Please also check ongoing floating volatility patterns of BW LPG and SITC International.

Diversification Opportunities for BW LPG and SITC International

-0.08

Correlation Coefficient

BW LPG  SITC International

Good diversification

The 3 months correlation between BWLLY and SITC is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding BW LPG and SITC International Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SITC International 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 are associated (or correlated) with SITC International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SITC International has no effect on the direction of BW LPG i.e., BW LPG and SITC International go up and down completely randomly.

Pair Corralation between BW LPG and SITC International

Assuming the 90 days horizon BW LPG is expected to generate 2.84 times less return on investment than SITC International. But when comparing it to its historical volatility, BW LPG is 1.41 times less risky than SITC International. It trades about 0.06 of its potential returns per unit of risk. SITC International Holdings is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  71.00  in SITC International Holdings on October 7, 2024 and sell it today you would earn a total of  183.00  from holding SITC International Holdings or generate 257.75% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	56.05%
Values	Daily Returns

BW LPG  vs.  SITC International Holdings

BW LPG

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BW LPG has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong essential indicators, BW LPG is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

SITC International

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in SITC International Holdings are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak forward indicators, SITC International reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with BW LPG and SITC International

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

The idea behind BW LPG and SITC International Holdings 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.

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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.