Correlation Between FLEX LNG and Seapeak LLC

Can any of the company-specific risk be diversified away by investing in both FLEX LNG and Seapeak LLC 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 Seapeak LLC into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between FLEX LNG and Seapeak LLC, you can compare the effects of market volatilities on FLEX LNG and Seapeak LLC 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 Seapeak LLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of FLEX LNG and Seapeak LLC.

Diversification Opportunities for FLEX LNG and Seapeak LLC

-0.61

Correlation Coefficient

FLEX LNG  Seapeak LLC

Excellent diversification

The 3 months correlation between FLEX and Seapeak is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding FLEX LNG and Seapeak LLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Seapeak LLC 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 Seapeak LLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Seapeak LLC has no effect on the direction of FLEX LNG i.e., FLEX LNG and Seapeak LLC go up and down completely randomly.

Pair Corralation between FLEX LNG and Seapeak LLC

Given the investment horizon of 90 days FLEX LNG is expected to under-perform the Seapeak LLC. In addition to that, FLEX LNG is 2.85 times more volatile than Seapeak LLC. It trades about -0.04 of its total potential returns per unit of risk. Seapeak LLC is currently generating about 0.08 per unit of volatility. If you would invest  2,282  in Seapeak LLC on September 27, 2024 and sell it today you would earn a total of  278.00  from holding Seapeak LLC or generate 12.18% return on investment over 90 days.

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

FLEX LNG  vs.  Seapeak LLC

FLEX LNG

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days FLEX LNG has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Seapeak LLC

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Seapeak LLC are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Seapeak LLC is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with FLEX LNG and Seapeak LLC

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

The idea behind FLEX LNG and Seapeak LLC 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.