Correlation Between Mitsui OSK and BW LPG

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

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

Diversification Opportunities for Mitsui OSK and BW LPG

-0.64

Correlation Coefficient

Mitsui OSK  BW LPG

Excellent diversification

The 3 months correlation between Mitsui and BWLLY is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Mitsui OSK Lines and BW LPG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BW LPG and Mitsui OSK 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 Mitsui OSK Lines 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 has no effect on the direction of Mitsui OSK i.e., Mitsui OSK and BW LPG go up and down completely randomly.

Pair Corralation between Mitsui OSK and BW LPG

If you would invest  1,692  in Mitsui OSK Lines on September 14, 2024 and sell it today you would earn a total of  13.00  from holding Mitsui OSK Lines or generate 0.77% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	1.59%
Values	Daily Returns

Mitsui OSK Lines  vs.  BW LPG

Mitsui OSK Lines

Risk-Adjusted Performance

0 of 100

Weak

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

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.

Pair Trading with Mitsui OSK and BW LPG

The main advantage of trading using opposite Mitsui OSK and BW LPG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mitsui OSK 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 Mitsui OSK Lines and BW LPG 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.