Correlation Between Golar LNG and United Maritime

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

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

Diversification Opportunities for Golar LNG and United Maritime

-0.7

Correlation Coefficient

Golar LNG  United Maritime

Excellent diversification

The 3 months correlation between Golar and United is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Golar LNG Limited and United Maritime in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Maritime and Golar 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 Golar LNG Limited are associated (or correlated) with United Maritime. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Maritime has no effect on the direction of Golar LNG i.e., Golar LNG and United Maritime go up and down completely randomly.

Pair Corralation between Golar LNG and United Maritime

Given the investment horizon of 90 days Golar LNG Limited is expected to generate 0.56 times more return on investment than United Maritime. However, Golar LNG Limited is 1.79 times less risky than United Maritime. It trades about -0.15 of its potential returns per unit of risk. United Maritime is currently generating about -0.1 per unit of risk. If you would invest  4,359  in Golar LNG Limited on October 13, 2024 and sell it today you would lose (221.00) from holding Golar LNG Limited or give up 5.07% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	95.0%
Values	Daily Returns

Golar LNG Limited  vs.  United Maritime

Golar LNG Limited

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Golar LNG Limited are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Golar LNG may actually be approaching a critical reversion point that can send shares even higher in February 2025.

United Maritime

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days United Maritime 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 technical and fundamental indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Golar LNG and United Maritime

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

The idea behind Golar LNG Limited and United Maritime 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.