Correlation Between MPC Container and BW LPG

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

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

Diversification Opportunities for MPC Container and BW LPG

0.0

Correlation Coefficient

MPC Container  BW LPG

Pay attention - limited upside

The 3 months correlation between MPC and BWLLF is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding MPC Container Ships 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 MPC Container 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 MPC Container Ships 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 MPC Container i.e., MPC Container and BW LPG go up and down completely randomly.

Pair Corralation between MPC Container and BW LPG

If you would invest (100.00) in BW LPG Limited on December 28, 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

MPC Container Ships  vs.  BW LPG Limited

MPC Container Ships

Risk-Adjusted Performance

Very Weak

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

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.

Pair Trading with MPC Container and BW LPG

The main advantage of trading using opposite MPC Container and BW LPG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MPC Container 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 MPC Container Ships 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..