Correlation Between Ultrapetrol Bahamas and BW LPG

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

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

Diversification Opportunities for Ultrapetrol Bahamas and BW LPG

0.0

Correlation Coefficient

Ultrapetrol Bahamas  BW LPG

Pay attention - limited upside

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

Pair Corralation between Ultrapetrol Bahamas and BW LPG

If you would invest  1,062  in BW LPG Limited on December 30, 2024 and sell it today you would earn a total of  60.00  from holding BW LPG Limited or generate 5.65% return on investment over 90 days.

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

Ultrapetrol Bahamas  vs.  BW LPG Limited

Ultrapetrol Bahamas

Risk-Adjusted Performance

Very Weak

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

BW LPG Limited

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in BW LPG Limited are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Even with relatively uncertain essential indicators, BW LPG may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Ultrapetrol Bahamas and BW LPG

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

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 Transaction History module to view history of all your transactions and understand their impact on performance.