Correlation Between FLEX LNG and Dorian LPG

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both FLEX LNG and Dorian 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 FLEX LNG and Dorian LPG into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FLEX LNG and Dorian LPG, you can compare the effects of market volatilities on FLEX LNG and Dorian 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 FLEX LNG with a short position of Dorian LPG. Check out your portfolio center. Please also check ongoing floating volatility patterns of FLEX LNG and Dorian LPG.

Diversification Opportunities for FLEX LNG and Dorian LPG

FLEXDorianDiversified AwayFLEXDorianDiversified Away100%
0.73
  Correlation Coefficient

Poor diversification

The 3 months correlation between FLEX and Dorian is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding FLEX LNG and Dorian LPG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dorian LPG and FLEX LNG 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 FLEX LNG are associated (or correlated) with Dorian LPG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dorian LPG has no effect on the direction of FLEX LNG i.e., FLEX LNG and Dorian LPG go up and down completely randomly.

Pair Corralation between FLEX LNG and Dorian LPG

Given the investment horizon of 90 days FLEX LNG is expected to generate 1.06 times more return on investment than Dorian LPG. However, FLEX LNG is 1.06 times more volatile than Dorian LPG. It trades about -0.07 of its potential returns per unit of risk. Dorian LPG is currently generating about -0.25 per unit of risk. If you would invest  2,693  in FLEX LNG on October 5, 2024 and sell it today you would lose (279.00) from holding FLEX LNG or give up 10.36% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

FLEX LNG  vs.  Dorian LPG

 Performance 
JavaScript chart by amCharts 3.21.15OctNovDec -30-20-100
JavaScript chart by amCharts 3.21.15FLNG LPG
       Timeline  
FLEX LNG 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days FLEX LNG has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unfluctuating performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.
JavaScript chart by amCharts 3.21.15NovDecJanDecJan212223242526
Dorian LPG 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Dorian LPG has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.
JavaScript chart by amCharts 3.21.15NovDecJanDecJan242628303234

FLEX LNG and Dorian LPG Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-3.39-2.54-1.69-0.84-0.01390.81.642.473.34.13 0.060.070.080.09
JavaScript chart by amCharts 3.21.15FLNG LPG
       Returns  

Pair Trading with FLEX LNG and Dorian LPG

The main advantage of trading using opposite FLEX LNG and Dorian LPG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FLEX LNG position performs unexpectedly, Dorian 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 Dorian LPG will offset losses from the drop in Dorian LPG's long position.
The idea behind FLEX LNG and Dorian 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.
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.

Other Complementary Tools

Transaction History
View history of all your transactions and understand their impact on performance
Bond Analysis
Evaluate and analyze corporate bonds as a potential investment for your portfolios.
Funds Screener
Find actively-traded funds from around the world traded on over 30 global exchanges
Portfolio Diagnostics
Use generated alerts and portfolio events aggregator to diagnose current holdings
Earnings Calls
Check upcoming earnings announcements updated hourly across public exchanges