Correlation Between CMBTECH NV and BW LPG

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

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

Diversification Opportunities for CMBTECH NV and BW LPG

-0.09

Correlation Coefficient

CMBTECH NV  BW LPG

Good diversification

The 3 months correlation between CMBTECH and BWLP is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding CMBTECH NV 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 CMBTECH NV 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 CMBTECH NV 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 CMBTECH NV i.e., CMBTECH NV and BW LPG go up and down completely randomly.

Pair Corralation between CMBTECH NV and BW LPG

Given the investment horizon of 90 days CMBTECH NV is expected to under-perform the BW LPG. But the stock apears to be less risky and, when comparing its historical volatility, CMBTECH NV is 1.01 times less risky than BW LPG. The stock trades about -0.07 of its potential returns per unit of risk. The BW LPG Limited is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest  1,103  in BW LPG Limited on May 18, 2025 and sell it today you would earn a total of  371.00  from holding BW LPG Limited or generate 33.64% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

CMBTECH NV  vs.  BW LPG Limited

CMBTECH NV

Risk-Adjusted Performance

Weakest

Over the last 90 days CMBTECH NV has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's fundamental drivers remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

BW LPG Limited

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in BW LPG Limited are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady essential indicators, BW LPG reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CMBTECH NV and BW LPG

The main advantage of trading using opposite CMBTECH NV and BW LPG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CMBTECH NV 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 CMBTECH NV 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.