Correlation Between DHT Holdings and Cheniere Energy

Can any of the company-specific risk be diversified away by investing in both DHT Holdings and Cheniere Energy 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 DHT Holdings and Cheniere Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between DHT Holdings and Cheniere Energy Partners, you can compare the effects of market volatilities on DHT Holdings and Cheniere Energy 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 DHT Holdings with a short position of Cheniere Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of DHT Holdings and Cheniere Energy.

Diversification Opportunities for DHT Holdings and Cheniere Energy

-0.68

Correlation Coefficient

DHT Holdings  Cheniere Energy

Excellent diversification

The 3 months correlation between DHT and Cheniere is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding DHT Holdings and Cheniere Energy Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cheniere Energy Partners and DHT Holdings 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 DHT Holdings are associated (or correlated) with Cheniere Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cheniere Energy Partners has no effect on the direction of DHT Holdings i.e., DHT Holdings and Cheniere Energy go up and down completely randomly.

Pair Corralation between DHT Holdings and Cheniere Energy

Considering the 90-day investment horizon DHT Holdings is expected to generate 1.19 times less return on investment than Cheniere Energy. In addition to that, DHT Holdings is 1.19 times more volatile than Cheniere Energy Partners. It trades about 0.02 of its total potential returns per unit of risk. Cheniere Energy Partners is currently generating about 0.03 per unit of volatility. If you would invest  4,589  in Cheniere Energy Partners on October 1, 2024 and sell it today you would earn a total of  760.00  from holding Cheniere Energy Partners or generate 16.56% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	99.79%
Values	Daily Returns

DHT Holdings  vs.  Cheniere Energy Partners

DHT Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days DHT Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's technical indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Cheniere Energy Partners

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Cheniere Energy Partners are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Cheniere Energy may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with DHT Holdings and Cheniere Energy

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

The idea behind DHT Holdings and Cheniere Energy Partners 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.